Silvercorp Update

Silvercorp Announces Its Financial And Operating Results For The 2nd Quarter Ended September 30, 2008

VANCOUVER, British Columbia � November 13, 2008 � Silvercorp Metals Inc. (the �Company�) is pleased to announce the unaudited financial and operating results for the 2nd quarter ended September 30, 2008.  The financial results in the following text are expressed in US dollars (US$) unless stated otherwise.

SECOND QUARTER HIGHLIGHTS

Financial highlights

For the three months ended September 30, 2008, the Company achieved sales of $20.1 million, down 31% compared to $29.2 million for the same period last year.  Gross profit from operations amounted to $10.2 million (three months ended September 30, 2007 - $23.2 million), a decrease of 56% and representing a gross margin of 51% (three months ended September 30, 2007 - 80%). Net earnings of $0.03 per share decreased $0.08 from $0.11 per share for the same period last year.

For the six months ended September 30, 2008, the Company achieved sales of $51.0 million, compared to $51.4 million for the same period last year.  Gross profit from operations amounted to $31.6 million (six months ended September 30, 2007 - $40.6 million), a decrease of 28.5% and representing a gross margin of 62% (six months ended September 30, 2007 - 79%). Net earnings of $0.11 per share decreased $0.10 from $0.21 per share for the same period last year.

Although the Company achieved higher production levels in terms of tonnes of ore mined and milled compared to the same period last year, both revenues and earnings decreased mainly due to the following: (i) the Company mined lower grade areas during the first two months of the quarter resulting in less metals produced and higher unit production costs; (ii) TLP Mine and LM Mine are still in the early stages of mining and therefore experiencing higher operating costs; (iii)  there was a significant drop in the selling price of lead (from $1.05 to $0.81 per pound) and zinc (from $1.03 to $0.41 per pound); (iv) there was a $1.2 million equity loss in investment due to an equity pickup of an impairment loss of $7.3 million of New Pacific Metals Corp.; (v) professional fees increased $0.7 million to improve the internal control to comply with the requirements of Sarbanes Oxley Act; (vi) no option income was recorded this quarter while $1.1 million in option income was recorded during the same period last year; and (vii) the Company�s subsidiary, Henan Found Mining Company Ltd. (�Henan Found�), is now subject to 12.5% income tax rate.

Cash provided by operating activities was $11.7 million for the three months ended September 30, 2008, a decrease of 43% compared to $20.5 million during the same period last year. The Company ended the quarter with $48.6 million in cash and short term investments.

Cash provided by operating activities was $26.9 million for the six months ended September 30, 2008, a decrease of 32% compared to $39.4 million over the same period last year. 

Capital expenditures during the six months ended September 30, 2008 amounted to $44.0 million (six months ended September 30, 2007- $7.3 million) representing the purchase of mineral rights and properties and deferred exploration costs totaling $35.4 million (six months ended September 30, 2007 - $5.1 million) and the purchase of equipment and construction of the new mill of $8.6 million (six months ended September 30, 2007 - $2.2 million).

OPERATION HIGHLIGHTS

Total sales and realized prices net of value added tax and smelter charges for the 2nd quarter ended September 30, 2008 as compared to the same period of 2007, are as follows:

During the quarter, the Company continued to conduct limited test production at the LM Mine and TLP Mine.  A total of 124,534 (2007 - 74,717) tonnes of ores were mined, representing a 67% increase compared to the same period in 2007, from which 2,571 (2007 - 3,411) tonnes of direct smelting ores were hand sorted for direct shipment to smelters, and 121,963 (2007 - 71,306) tonnes of ores were shipped to mills for treatment to recover silver-lead and zinc concentrate.

The total mining cost per tonne of ore mined increased by 33% compared to the same period of 2007 to $69.94 per tonne (2007 - $52.70 per tonne) which comprised of cash unit mining cost of $52.33 and non-cash unit mining cost of $17.61 per tonne of ore. The increase is primarily caused by an increase of amortization and depletion of $11.22 per tonne and the increase of raw materials and utilities costs of $6.71 per tonne due to the price increase.

The total milling cost per tonne of ore milled has increased 7% to $12.45 in this quarter from $11.64 in the same period of 2007. 

The total production cost per ounce of silver and total cash cost per ounce of silver were negative $0.91 (2007 - negative $12.71) and negative $3.50 (2007 - negative $14.17), respectively, after adjusting for by-product credits. The increase of production cost as well as cash production cost was mainly caused by the reduction in by-product credits as lead prices fell 23% to $0.81 per pound, and zinc prices fell 60% to $0.41 per pound.

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