Silvercorp Announces Positive Pre-Feasibility Study for the
GC Silver-Lead-Zinc Project in Guangdong Province,
China
VANCOUVER, BRITISH COLUMBIA, CANADA �January 31, 2012 � Silvercorp Metals Inc. ("Silvercorp�
or the �Company�) is pleased to announce it has received a positive Pre-Feasibility Study (�PFS�)
for its 95%-owned GC
Project in Guangdong Province, China. The PFS was prepared by independent
consulting firm AMC Mining
Consultants (Canada) Ltd. (�AMC�).
�The Company has already commenced construction at the GC Project and initial production is expected to commence in the
3rd quarter of calendar year
2012� said Rui Feng, Silvercorp�s Chairman & CEO. �We
are pleased that Proven and Probable Reserves at the GC Project have been established
for the first time, and the PFS also reconfirms the project�s robust economics�.
Highlights of the Pre-Feasibility
Study
- Defined mineral reserves of 4.8 million tonnes in the Proven and Probable categories
grading 121 grams
per tonne (g/t) silver (Ag), 1.31% lead (Pb),
and 2.95% zinc (Zn), containing approximately 18.5 million ounces
(oz) silver, 62,100 tonnes of lead, and
140,200 tonnes of zinc, supporting a project life of 12 years.
- Net Present Value (�NPV�) was estimated to be $73.7 million (at an 8%
discount rate) with an IRR of 33% and payback in 2.4 years; and,
- An initial capital cost of
$67.4 million and total operating cost of
$40.60/ per tonne milled.
In preparation for
production, a 1,500 tonne per day (tpd) (rising to 1,570 tpd after five years) mining capacity and 1,600 tpd flotation milling capacity facilities are under construction. The flotation
mill is designed to generate silver-lead, zinc, and pyrite concentrates.
The optional gravity tin recovery circuit can be appended to the main circuit
to recover tin from tailings.
Mineral Resource and Reserve Summary
Mineral Resources:
AMC estimated Measured
and Indicated Resources totaling 7.63 million tonnes grading
122 g/t Ag, 1.32% Pb, and 3.08% Zn and Inferred Resources totaling 7.96 million
tonnes containing 123 g/t Ag, 1.41% Pb, and 2.66%
Zn, as detailed in the Table below,
which does not include any of the results of the Company�s 2011
surface drilling program at
the GC Project announced on January
17, 2012.
Resource Classification
|
Tonnes
|
Grade
|
Contained Metal
|
|
|
Ag (g/t)
|
Pb %
|
Zn %
|
Ag (oz)
|
Pb (t)
|
Zn (t)
|
Measured
|
592,800
|
230
|
1.41
|
3.33
|
4,383,600
|
8,400
|
19,800
|
Indicated
|
7,038,700
|
113
|
1.31
|
3.06
|
25,571,800
|
92,500
|
215,500
|
Total
|
7,631,500
|
122
|
1.32
|
3.08
|
29,955,400
|
100,900
|
235,300
|
Inferred
|
7,959,800
|
123
|
1.41
|
2.66
|
31,477,300
|
112,500
|
211,900
|
Silver
Equivalent formula, parameters and metal prices as for mineral reserves below
Inclusive of resources converted
to mineral reserves
Lower cut-off grade, 100
g/t AgEq Recovered
Rounding of some figures may lead to minor discrepancies in some totals
Mineral Reserves:
The PFS defined mineral
reserves of 4.8 million tonnes in the Proven and Probable categories containing approximately 18.5
million oz. silver, 62,100 tonnes of lead, and
140,200 tonnes of zinc with a
projected mine life of 12 years.
Category
|
Mineral Reserve (t)
|
Ag (g/t)
|
Pb (%)
|
Zn (%)
|
Ag (oz)
|
Pb (t)
|
Zn (t)
|
Ag. Eq. (g/t)*
|
Proven
|
464,000
|
199
|
1.12
|
3.18
|
2,968,000
|
5,180
|
14,750
|
268
|
Probable
|
4,285,700
|
113
|
1.33
|
2.93
|
15,510,000
|
56,910
|
125,480
|
212
|
Proven + Probable**
|
4,749,700
|
121
|
1.31
|
2.95
|
18,478,000
|
62,090
|
140,230
|
218
|
*Ag
Eq (g/t) is the recovered silver equivalent using metal prices of US$18.00/ troy oz Ag, US$1.00/lb Pb, US$1.00/lb Zn and Recoveries of 62.78% Ag, 84.57% Pb and 88.42% Zn, and calculated using the formula AgEq Recovered = {Ag (g/t) * Ag
($/g) * Ag (Rec%)} / Ag ($/g) + {Pb (%) * Pb ($/lb)
* Pb (Rec%) * 22.0462} / Ag ($/g) + {Zn (%) * Zn
($/lb) * Zn (Rec%) * 22.0462} / Ag ($/g)
**135 g/t Ag Eq cut-off
for Stope Reserves &
45 g/t Ag Eq for Development
Reserves.
Rounding of some figures may lead to minor discrepancies in some totals
The reserves were estimated by converting Measured and Indicated Resources for 21 out
of 25 veins occurring between the +100 mRL
and -300 mRL elevations. For mine design
reasons, the PFS did not include approximately 2.5
million tonnes of Measured and Indicated
Resources above the +100 mRL elevation (as the mineability of this material has yet to be fully assessed),
and below -300 mRL down
to -535m elevation, (as -300 mRL
is the lower limit of the current mine
design).
Economics
AMC has estimated a Base
Case Net Present Value (�NPV�) for the GC project of $73.7 million (at an
8% discount rate), an internal rate of return (IRR)
of 33% and payback of capital expenditures
in 2.4 years. These economic metrics are positive and demonstrate
that the project is robust in the face of the
possible scenarios that typically
impact on a mining operation.
The metal prices used in the AMC financial model are shown in
the table below.
|
2012
|
2013
|
2014
|
2015
|
After 2015
|
Silver (US$/oz)
|
40.00
|
30.00
|
25.00
|
18.00
|
18.00
|
Lead (US$/lb)
|
1.11
|
1.16
|
1.14
|
1.15
|
1.00
|
Zinc (US$/lb)
|
1.05
|
1.12
|
1.11
|
1.15
|
1.00
|
Foreign exchange rate
was set at USD:RMB of
6.35.
Capital
Costs
Total initial capital expenditure is estimated to be $67.4 million including mining, mill, infrastructure, owner�s costs and contingency.
Summary of Capital Costs
|
US$000
|
Mining
|
18,490
|
Mill and
Infrastructure
|
29,619
|
Owner�s Costs
|
11,655
|
Contingency
|
7,589
|
Total Initial
Capital Expenditure
|
67,352
|
Working Capital
|
5,714
|
Sustaining
|
25,321
|
Total LOM Capital Cost
|
92,673
|
Note: working capital
netted to zero in Total
Life of Mine Capital Cost
Operating
Costs
The total operating cost for the project is estimated
at $40.60/t milled. The estimate includes mining, process, general and administration (�G&A�) and surface
service costs.
Summary of Operating Costs
|
US$/t
|
Mine
|
15.20
|
Mill
|
16.80
|
G&A
|
8.60
|
Total Operating Costs
|
40.60
|
Mine
Design & Mining Method
The design strategy is two staged with
Stage 1 being predominantly
mechanized development to
fast track production while the longer term Stage 2 at depth reverts
to conventional tracked development methods. The Stage
1 Ramp is a 4.2 m x 3.6m
in profile, 2,224 m in length and access is from
+176 mRL down to -64mRL. The Stage 2 Main Shaft is 6.0 m in diameter and 618m in depth. The
main shaft collar is at +248 mRL
and sump bottom is at -370 mRL.
Silvercorp will utilize the Shrinkage and Resue stoping mining methods at the GC Project, the same methods Silvercorp uses at its Ying Mining
Camp.
For photos showing progress to date please visit:
http://silvercorpmetals.com/_resources/2012_01_05_gc_update_presentation.pdf.
Production
An Environmental Permit and 30-year Mining License were received in 2010 and Silvercorp is currently in the process of constructing the mine. Initial production is expected to start in the third quarter of
2012 with full capacity
of 1,500 tonnes per day expected
to be achieved in 2013. The following table summarizes the Life of Mine production and ore grades for
the GC Project.
Life
of Mine Production Summary
Year
|
Production (t)
|
Ag (g/t)
|
Pb (%)
|
Zn (%)
|
Ag (oz )
|
Pb (t)
|
Zn (t)
|
Ag Eq (g/t)*
|
2012
|
91,799
|
184
|
0.91
|
3.43
|
543,415
|
839
|
3,147
|
260
|
2013
|
484,547
|
159
|
1.20
|
2.87
|
2,477,711
|
4,942
|
13,929
|
230
|
2014
|
472,387
|
150
|
1.19
|
2.84
|
2,272,621
|
5,623
|
13,399
|
228
|
2015
|
395,153
|
115
|
1.36
|
2.55
|
1,460,906
|
5,362
|
10,080
|
202
|
2016
|
487,570
|
110
|
1.43
|
3.03
|
1,723,354
|
6,945
|
14,787
|
217
|
2017
|
524,317
|
121
|
1.50
|
3.08
|
2,047,468
|
7,865
|
16,148
|
228
|
2018
|
525,385
|
120
|
1.34
|
2.75
|
2,022,486
|
7,039
|
14,379
|
211
|
2019
|
525,005
|
112
|
1.38
|
3.30
|
1,882,694
|
7,250
|
17,340
|
226
|
2020
|
526,510
|
110
|
1.30
|
2.99
|
1,855,398
|
6,841
|
15,768
|
212
|
2021
|
520,672
|
97
|
1.38
|
2.96
|
1,617,835
|
7,163
|
15,391
|
205
|
2022
|
196,319
|
91
|
1.13
|
2.99
|
574,730
|
2,220
|
5,867
|
194
|
Total LOM
|
4,749,665
|
121
|
1.31
|
2.95
|
18,478,650
|
62,089
|
140,234
|
218
|
*Ag
Eq (g/t) is the recovered silver equivalent using metal prices of US$18.00/ troy oz Ag, US$1.00/lb Pb, US$1.00/lb Zn and Recoveries of 62.78% Ag, 84.57% Pb and 88.42% Zn, and calculated using the formula AgEq Recovered = {Ag (g/t) * Ag
($/g) * Ag (Rec%)} / Ag ($/g) + {Pb (%) * Pb ($/lb)
* Pb (Rec%) * 22.0462} / Ag ($/g) + {Zn (%) * Zn
($/lb) * Zn (Rec%) * 22.0462} / Ag ($/g).
Processing Facility
The processing plant is designed for 1,600 tpd flotation mill process consisting of a
standard sequential flotation
of lead, zinc and pyrite with three-stage
cleaning of the lead and zinc concentrates
and single stage cleaning for pyrite. An optional tin gravity recovery circuit potentially can be appended
to the main circuit to recover tin in the tailings. Concentrates are dewatered by conventional thickening and filtration. The final products
are lead, zinc, and pyrite concentrates, with a possible tin concentrate.
Payable silver is in the
lead concentrate.
Permitting
Silvercorp has received
all permits required for
commencement of construction of the mine, including
Environmental and Mining Permits. Once completed,
production can commence from
the GC mine upon receipt
of the following permitting
measures:
- completion of a review
of the health and safety
production measures by the Guangdong Provincial Safety Production Bureau (�GPSPB�);
- a post-construction safety measure
inspection by GPSPB to ensure the mine, mill and tailing facility has been built to the
�Mine Design� in terms of safety
measures; and
- an inspection of the tailing facility,
mill, and other
engineering works by the Guangdong Environmental Bureau.
Qualified Person
Brian O�Connor, P.Geo,
Peter Mokos, MAusIMM (CP), Alan Riles
MAIG, Mo Molavi, P. Eng and Patrick Stephenson, P. Geo of AMC Mining Consultants
(Canada) Ltd. are Qualified Persons
as defined by National Instrument 43-101 and have reviewed and consented to this press release and that it fairly
and accurately represents
the information in the Technical Report that supports the disclosure.
Myles Gao, P.Geo., President and Chief Operating Officer of Silvercorp, is the Qualified Person for Silvercorp
under NI 43-101 and has reviewed
and given consent to this
press release.
About
Silvercorp Metals Inc.
Silvercorp Metals Inc. is engaged in the acquisition, exploration, development and mining of
high-grade silver-related mineral
properties in China and Canada. Silvercorp
is the largest primary silver producer in China through the operation of the four silver-lead-zinc
mines at the Ying Mining
District in the Henan Province of China. Silvercorp
recently acquired the XBG
and XHP silver-gold-lead-zinc mines nearby the Ying Mining District
in Henan Province, further consolidating
the region. Silvercorp
has commenced production at
its second production foothold
in China, the BYP gold-lead-zinc project in Hunan
Province, and is currently
constructing the mill and
related facilities in preparation for mining at the GC silver-lead-zinc project in Guangdong Province. In Canada, Silvercorp is preparing an application for a Small Mine Permit for the Silvertip high grade silver-lead-zinc
mine project in northern
British Columbia to provide a further
platform for growth and geographic diversification. The Company�s
shares are traded on the
New York Stock Exchange (symbol: SVM) and Toronto
Stock Exchange (symbol: SVM) and are included as a component of the S&P/TSX Composite and
the S&P/TSX Global Mining Indexes.
For
further information: SILVERCORP
METALS INC., Rui Feng, Chairman & CEO and Lorne
Waldman, Corporate Secretary, Phone: (604) 669-9397, Fax: (604) 669-9387, Toll Free 1(888) 224-1881, Email: info@silvercorp.ca, Website:
www.silvercorp.ca.
CAUTIONARY
DISCLAIMER -- FORWARD LOOKING STATEMENTS
Certain of the statements and information in this
press release constitute
�forward-looking statements�
within the meaning of the
United States Private Securities Litigation Reform Act of 1995 and �forward-looking
information� within the meaning
of applicable Canadian provincial securities laws. Any statements
or information that express or involve
discussions with respect to predictions,
expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often,
but not always, using words or phrases such as �expects�, �is expected�, �anticipates�, �believes�, �plans�, �projects�,
�estimates�, �assumes�, �intends�,
�strategies�, �targets�,
�goals�, �forecasts�, �objectives�, �budgets�, �schedules�, �potential� or
variations thereof or stating
that certain actions, events
or results �may�, �could�, �would�, �might� or �will� be taken, occur
or be achieved, or the negative of any of these terms and similar expressions) are not statements
of historical fact and may be forward-looking
statements or information. Forward-looking
statements or information relate to, among other things:
the price of silver and other metals; the accuracy of mineral resource and mineral reserve estimates at the Company�s material properties; the sufficiency of the Company�s
capital to finance the Company�s operations; estimates of the Company�s revenues and capital expenditures;
estimated production from
the Company�s mines in the Ying Mining
Camp; timing of receipt of permits
and regulatory approvals;
availability of funds from production to finance the Company�s
operations; and access to
and availability of funding
for future construction, use of proceeds from any financing
and development of the Company�s
properties.
Forward-looking statements or information
are subject to a variety
of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected
in the forward-looking statements
or information, including, without
limitation, risks relating
to: fluctuating commodity
prices; calculation of resources, reserves and mineralization and precious and
base metal recovery; interpretations and assumptions
of mineral resource and mineral reserve estimates; exploration and development
programs; feasibility and engineering reports; permits and licences; title to properties; First Nations title
claims and rights; property
interests; joint venture partners; acquisition of commercially
mineable mineral rights; financing; recent market events and conditions; economic
factors affecting the Company; timing, estimated amount, capital and operating expenditures
and economic returns of
future production; integration of future
acquisitions into the Company�s
existing operations; competition; operations and political conditions; regulatory
environment in China and Canada; environmental risks; foreign exchange rate fluctuations; insurance;
risks and hazards of mining operations; key
personnel; conflicts of interest;
dependence on management; internal
control over financial reporting
as per the requirements of the Sarbanes-Oxley
Act; and bringing actions
and enforcing judgments under U.S. securities laws.
This list is not exhaustive of the factors that may affect any of the Company�s forward-looking statements or information. Forward-looking
statements or information are statements
about the future and are inherently uncertain, and actual achievements of the Company or other future events or
conditions may differ materially from those reflected in the forward-looking statements or
information due to a variety of risks,
uncertainties and other factors, including, without limitation, those referred to in the Company�s Annual Information Form for the
year ended March 31, 2010
under the heading �Risk Factors�. Although the Company has attempted to identify important
factors that could cause actual results to differ materially, there may be other
factors that cause results not to be as anticipated, estimated, described or intended. Accordingly, readers should not place undue reliance on forward-looking statements or information.
The Company�s forward-looking statements and information are based
on the assumptions, beliefs,
expectations and opinions of management as of the date of this
press release, and other than as required by applicable securities laws, the Company does not assume any obligation to update forward-looking
statements and information if circumstances
or management�s assumptions,
beliefs, expectations or opinions should change, or changes in any
other events affecting such statements or information. For the reasons
set forth above, investors should not place undue reliance on forward-looking statements and
information.
|