Strategy

The management of Silvercorp has always approached the business of mining differently than most North American junior exploration companies.  Rather than purely drilling for years to build up a resource that it intends to sell to someone else, Silvercorp aimed at the outset to go into operations quickly so that it could run a real and profitable business. 

This long-term strategy was characterized by three key steps:

1. Acquire a project and conduct selective exploration to further delineate its potential;
2. Develop mine operations and generate profits before the project’s potential is fully drilled off; and 
3. Use the cash flows generated from operations to fund further exploration, resource expansion and production ramp up.

Silvercorp’s strategy has been effectively applied at its Ying mining camp, where over 67,000 metres of underground workings (tunnels and stopes) and 143,000 metres of underground and surface drilling were carried out between 2004 and 2009.  From April 2006 to March 2010, total profits of $388 million, net income of $147 million and $222 million in cash flows were generated on total silver sales of just under 15 million ounces. 

Silvercorp's long-term strategy produced three key benefits: 

1. Local Employment – mine development creates jobs for neighbouring communities, boosting the local economy and creating an immediate sense of community involvement in the project.
2. Tax Revenue for Local Government – boost in local support and the taxes collected from profits ensures the support of the local government for the continuation and success of the project.
3. Minimum Dilution for Shareholders – immediate profits and returns means immediate value appreciation for Silvercorp’s shareholders and minimum dilution of shareholders’ equity.

Because the full potential of Silvercorp’s projects has not been realized due to limited drilling, the projects are still open to tremendous exploration potential.  For instance, only a small portion of the Ying Mining Camp's 70 km² project block has been fully explored.  As of the date of the last technical report on February 26, 2010, silver-lead-zinc-gold-copper resources have been discovered in more than 80 major minealized veins plus a number of other veins which have not yet been developed at the Ying property. 

And while the company has mined out almost 15 million ounces of silver over the past four years, the latest 2010 updated resource numbers at the Ying mining camp remained essentially unchanged.  This demonstrates that exploration programs have been able to replenish all of the resources that have been depleted through mining operations.  Continuing work in these areas may find new veins as well as new mineralized shoots in known veins, potentially extending the life of the company’s mines for many years.

Long-term Goals

Silvercorp plans on continuing its growth through increasing mine capacity and production, resource expansion through exploration of existing projects and continuing acquisitions both within and beyond the borders of China.