Silvercorp acquired the Haopinggou ("HPG") silver-gold-lead property in January 2007. Located directly adjacent to the Ying Project, the property includes an exploration permit covering 5.86 km2 and two mining permits covering 0.54 km2. After just four months of preparation, Silvercorp commenced mining and milling operations on May 1, 2007.
The HPG Project is 100% owned by Henan Huawei Mining Co. Ltd., a sino-foreign cooperative JV company owned 80% by Silvercorp (through a wholly owned Chinese subsidiary) and 20% by Luoning Huatai Mining Development Co. Ltd. (a private company). Silvercorp fully earned a 70% interest in Henan Huawei in May 2007 through the contribution of approx. US$6.3-million. Then in May 2010, Silvercorp acquired additional shares from the minority shareholder of Henan Huawei and increased its ownership interest to 80%.
The HPG area has been mined intermittently over the last several hundred years by local miners. Previous exploration work included surface trenching, diamond core drilling, and tunnelling by No. 1 Geological Brigade of Henan Bureau of Non-ferrous Geological Exploration from 1988 to 1999. About 20 mineralized gold-silver-lead veins were identified but only two veins with strike lengths of approximately of 1.4 km to 2.7 km were targets of exploration and mining activities. A mine was opened in 1995 and ownership passed through several private Chinese companies before Silvercorp.
The HPG property is considered to be an extension of the Ying property and contains the same steeply dipping silver-lead-zinc-rich quartz-carbonate veins in Precambrian gneiss and greenstone. However, most of the HPG veins contain significant amounts of gold, often 1.0 to 4.0 g/t Au or more over widths up to 1 meter, distinctly more than veins typical of the Ying project. The HPG veins, which trend northeast-southwest, are crossed by a 1-km long, northwest-southeast trending breccia body which caps a ridge across the vein trend. The breccia locally carries from 1.86 to 2.77 g/t gold over widths of 3.0 to 7.5 m. Additionally, strongly anomalous amounts of gold (up to 30 g/t gold over 2.5 m widths) are locally associated with a several-kilometre long north-south diabase dike that lies just south of the principal HPG vein swarm.
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Silvercorp conducts mining activities using 10 main access tunnels. The mining method used on the ore shoots is shrinkage stoping. Mining is conducted from the lower to the upper level and the length of a stope extends over the length of the ore shoot about 70 to 100 m long along strike. The geotechnical conditions in the hanging wall and the vein are generally good. Mining capacity at the mine is approximately 200 tonnes per day. Ore is removed by two-tonne tricycle trucks and stockpiled for transport to Silvercorp's central milling facility 15 km away to be processed into concentrate. All mining and development are completed by a mining contractor.
Concentrates are sold to smelters within Henan province, many located within 160 km of the mill. Payable prices are based on the 10-day average spot price on the Shanghai Metals Exchange less Value Added Tax and smelter charges.
Exploration and delineation of mineralized veins in the HPG Mine area is done primarily by underground drilling and tunneling. Tunneling is done along strike of the veins at 40 m depth levels and core holes are drilled at 50-100 m spacings along strike to delimit the extent of the veins at greater depth. As of the date of the latest technical report, 12,280 m of exploration tunnels, 96 underground holes (21,761 m), and 67 surface drill holes (17,092m) have been completed.
Each of Silvercorp's producing mine areas in the Ying District, have defined Ag-Pb-Zn resources and reserves that are currently large enough to support profitable operations for a decade or more. None of the mine areas, however, have as yet been fully explored or delimited, especially to the depths typical of many similar Ag-Pb-Zn mesothermal vein districts elsewhere in the world. Each mine area in the Ying District has a large number of already identified veins that have not been explored in detail, and exploration to date has been quite successful in discovering many new veins that have not been explored at all. There are also a number of promising outlying intermediate stage exploration target areas, any of which could well become future additional "fast-track" mining developments.
Last updated June 13, 2012