2006

Highlights of Silvercorp's audited consolidated financial statements for the year ended March 31, 2006

VANCOUVER, British Columbia – July 10, 2006 – Silvercorp Metals Inc. (the "Company") provides some highlights in its audited consolidated financial statements for the financial year ended March 31, 2006 ("fiscal 2006"):

On September 30, 2005, having made all required payments well ahead of the three year schedule, the Company earned its full 77.5% interest in Henan Found Mining Co. Ltd. ("Henan Found"), which holds the Ying Silver-Lead-Zinc Property. As a result, the operating results of Henan Found have been consolidated into the financial statements of the Company starting from October 1, 2005. Henan Found's prior operations, from its inception to September 30, 2005, were not consolidated into the Company's 2006 financial statements.

For the six months from October 1, 2005 to March 31, 2006, the Company capitalized exploration and development expenses of $4,602,696 on the consolidated balance sheet, which was offset by a cost recovery of $5,425,282 ($2,381,718 from the quarter ended December 31, 2005 and $3,043,564 from the quarter ended March 31, 2006) through selling ore and mineral concentrates produced as by-products of exploration tunneling.

From the date of inception to March 31, 2006, Henan Found capitalized mineral exploration expenses of $7,673,432, including drilling and tunneling expenses of $4,121,296, with an offset by a cost recovery of $7,882,932 through selling ore and mineral concentrates produced as by-products of exploration tunneling.

During fiscal 2006, the Company recognized mineral rights of $3,236,996 upon consolidating the financials of Henan Found. This amount was made up of 3 parts:

1. $1,767,652 (US$1.5 million) paid to the Chinese shareholder of Henan Found.
2. $750,343 in relation to the pre-acquisition loss incurred by Henan Found.
3. $719,001 to reflect the difference between making a 100% cash contribution to the registered capital of Henan Found while the Company can only earn 77.5% interest.

During fiscal 2006, the Company had additions to property, plant and equipment of $1,280,390, including $244,180 in motor vehicles, $110,710 in equipment and furniture, $71,085 in computer equipment and software, $213,124 in mining equipment and machinery, $154,766 in building and $486,525 in mine development site construction in progress.

The Company reported a net loss of $6,259,255, including non-cash items totaling $3,900,747, for fiscal 2006 resulting in a basic and diluted loss per share of $0.15. The non-cash items included stock-based compensation expenses of $2,295,591, writing off of $1,714,491 mineral exploration expenses previously capitalized in relation to the Tuobuka Property, depreciation of $73,707, equity loss in investment of $159,334 and mineral property option income of $342,376.

The net loss before the non-cash items for fiscal 2006 thus was $2,358,508, including $2,219,165 for the operating expenses of the head office in Vancouver and its wholly owned subsidiaries for fiscal 2006 and $570,299 for the operating expenses of Henan Found for the six months from October 1, 2005 to March 31, 2006. The corresponding basic and diluted net loss per share before non-cash items was $0.06.

The complete audited consolidated financial statements are available for review on our web-site www.silvercorp.ca, and on the SEDAR system at www.sedar.com.


For further information: SILVERCORP METALS INC., Rui Feng, Chairman & CEO
Phone: (604) 669-9397, Fax: (604) 669-9387, Email: info@silvercorp.ca, Website: www.silvercorp.ca

Statements in this press release other than purely historical information, including statements relating to the Company's future plans and objectives or expected results, constitute forward-looking statements. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in the Company's business, including risks inherent in mineral exploration and development. As a result, actual results may vary materially from those described in the forward-looking statements. Production and revenue projections are based not on mineral reserves but on mineral resources which do not have demonstrated economic viability