Strategy

Operating in China poses great opportunities but also unique challenges.  Management of Silvercorp has built up a record of success in this environment by formulating and executing a distinct long-term strategy 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

3)     Use cash flow generated from operations to fund further exploration, resource expansion and production ramp up.

Silvercorp’s strategy has been effectively applied at its Ying mining and exploration project, where over 74,619 metres of underground workings (tunnels and stopes) and 78,581 metres of underground and surface drilling in 280 holes were completed between 2004 and 2007.  Most of the work was financed by profits from the sale of ore taken out during mine development, which produced three key benefits critical to our continued success:

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 Ying’s 50 km² project block has been fully explored.  As of the date of the last technical report on August 16, 2007, silver-lead-zinc-gold-copper resources have been defined at only 18 out of 28 veins identified at the Ying property.  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 with a focus in China.