GC Project

Introduction

Silvercorp acquired the Gaocheng ("GC") silver-lead-zinc exploration permit in April 2008. Located about 200 kilometres west of Guangzhou City, Guangdong Province, southern China, the permit covers an area of 5.5 km². Since 2001, the GC permit has been explored for gold, silver, lead, zinc, and sulphur. In December 2010, Silvercorp received a mining permit on the GC project and construction of a 1,600 tpd mine and mill is currently underway.

Ownership

The GC exploration permit is 100% owned by Anhui Yangtze Mining Co. Ltd., ("Anhui Yangtze") a sino-foreign cooperative JV company owned 95% by Silvercorp (through a wholly owned subsidiary). The cost to acquire the interest was approximately US$60.27-million and was paid for 40% in cash ($24-million) and 60% in common shares of Silvercorp (4,532,543 common shares of the company were issued at CAD$8.20 per share). In addition to the GC exploration permit, Anhui Yangtze also owns 100% of the nearby 9.5km² Shimentou silver-lead-zinc exploration permit.

History 

Since 1959, extensive systematic geological mapping, airborne magnetic surveys, stream sediment geochemical surveys, local IP surveys and trenching was conducted by provincial geological bureau teams. From 2001 to 2007, a total of 13,464 metres of diamond drilling and 9,435 cubic metres of trenching was completed on the GC project. During 2008, Silvercorp completed 22 hole, 10,083 metre drilling program, which resulted in the discovery of an additional 15 mineralized veins. Please refer to the 2009 GC technical report completed by AMC Mining Consultants (Canada) Ltd. for further information.

Geology

The GC project area is located in the north-eastern margin of Luoding Basin, the middle portion of uplift in the Hua‟nan (South China) Fold System. The deposit occurs on the intersection of a north-easterly striking fault zone and a near east-westerly striking fault zone. North-east striking structures and arc structures form the basic geological framework of the region. Outcrop include Late Proterozoic Sinian sedimentary clastics and carbonate rocks, which host Ag-Pb-Zn polymetallic deposits in the region, Paleozoic Ordovician, Silurian, Devonian and Carboniferous sedimentary clastics and carbonate rocks which host some Cu-Pb-Zn, Mn and Au-Ag deposits, Mesozoic / Triassic coal-bearing clastics rocks, and Cretaceous red clastics rocks. Intrusive rocks occur in the central area of an arc/ring structure, include Paleozoic granite batholiths, and Mesozoic granite stocks and dykes. The stocks and dykes intrude in the inner zone of the arc/ring structure, and are closely related to the Ag-Pb-Zn polymetallic mineralization in the region.

The mineralization on the GC project is structurally controlled occurring in veins formed along fault traces which are enveloped by an alteration zone. The alteration zone may reach a few metres from the vein occurring in both the hanging and footwall. The identified Ag-Zn-Pb veins are divided into two groups - the NWW striking and NE striking.

GC Project Resources*

* From June 22, 2009 NI 43-101 Technical Report Update on the GC Ag-Zn-Pb Project by AMC Consultants. Report was prepared by Brian O'Connor, P.Geo. The mineral resources use a 150 g/t recovered Ag Equivalent cut-off. Ag Eq is calculated using US$12/oz Ag, US$0.75/lb Pb and US$0.75/lb Zn using the following formula:AgEq(g) = ((Ag g/t * $Ag/g * Ag Recovery) / $Ag/g) + ((Pb% * $Pb/lb * Pb Recovery * 22.0462) / $Ag/g) + ((Zn% * $Zn/lb * Zn Recovery * 22.0462) / $Ag/g). Recoveries used were Ag: 84.82%, Pb:84.57%, and Zn: 88.42%. Mineral resources that are not mineral reserves do not have demonstrated viability.

GC Project Status - Progress Towards Production

Silvercorp has made significant progress in advancing the GC Project towards production with mine and mill construction well underway. As at January 10, 2012, the following work has been completed:

• Completion of 610 meters of the 4 m by 4.5 m Stage 1 ramp since mid-August 2011
• Preparation of the 6-meter diameter main shaft opening, ventilation shaft opening and the ore bin foundation to allow for cement pouring
• Installation of a main shaft head-frame and sunk 22 m of main shaft and 70 m of the ventilation shaft
• Completion of water recycling tanks for the mill and assay lab
• 60% completion of the mine office building and the staff accommodation building, and
• Completion of earth work and ground preparation of the crushers, ball mills, floatation, filtration, and loading shed of concentrates

Please also view the Progress Update Slideshow for recent pictures of our progress.

Silvercorp is using the same contractor who built the Company's two mills at the Ying Mining District to build the GC Project's 1,600 tpd mill. In accordance with plans, mill completion is expected by July 2012 with an estimated cost of US$17 million.

In addition, AMC Mining Consultants (Canada) Ltd. is nearing completion of a pre-feasibility study, which is expected in January 2012.

Exploration

With a mining permit in hand, Silvercorp has now resumed exploration at the GC Project. For the current fiscal year, Silvercorp has planned a 20,000 m surface diamond drill program ($2.5 million). The surface drilling program aimed to upgrade inferred mineral resources to the indicated and measured categories, and to explore and define new mineralized veins at the GC Project. 

During 2011, a total of 14,370 meters comprising of 34 holes were completed by two drill rigs at the property. The drill program has discovered four new high-grade Ag-Pb-Zn veins and a number of vein structures and isolated mineralized pockets, increasing the total number of mineralized veins at the GC property to 33 veins. The program also successfully extended the existing veins further to down dip and striking directions. 

Selected significant intercepts of the 2011 surface diamond drilling program include:

• Hole ZK40605 intercepted 0.40m interval of the V6 vein grading 2,450 g/t Ag, 1.29% Pb, 11.65% Zn, and 0.41% tin (Sn)
• Hole ZK2406 intersected 3.13 m interval of the V9W-2 vein grading 432 g/t Ag, including 0.40 m interval containing 3120 g/t Ag, 0.95% Pb, 3.67% Zn, and 0.38% Sn
• Hole ZK1204 intersected 3.42 m interval of the V6-0 vein grading 305 g/t Ag and 2.48% Pb, 2.03% Zn, and 0.34% Sn, including 1.26 m interval containing 566 g/t Ag, 0.55% Pb, 0.69% Zn, and 0.17% Sn; 0.55 m interval of the vein V8-2 grading 1,060 g/t Ag, 2.06% Pb, 0.52% Zn, and 0.04% Sn

Please refer to Silvercorp's January 17, 2012 news release and 2011 Drilling Maps for further information.