Silvercorp’s US$50M plan

Silvercorp (SVM-T) has big expansion plans for its Ying silver-lead-zinc mining camp in Henan province, China, that would see the company mine 700,000 tonnes of ore per year by 2010.

Right now the company’s mining at a rate of 300,000 tonnes per year with ore coming from the Ying and HPG mines. Silver production is expected to be about 4 million oz. for fiscal 2008.

Mining capacity is expected to rise to 500,000 tonnes over the next year as the company gets the nearby TLP and LIM mines going, which it bought last November and December, respectively.

The company plans to triple milling capacity to 3,000 tonnes per day with the goal of reaching 1 million tonnes per year by 2010.

Silvercorp has budgeted US$50 million for fiscal 2009, which begins April 1, with about US$12 million going towards a new mill and tailings dam, US$10 million for developing mining capacity and infrastructure at the TLP and LM mines and US$4 million earmarked for upgrading and mechanizing the Ying and HPG mines.

Another US$24 million will cover 60 km of tunneling, 62,500 metres of surface drilling and 75,000 metres of underground drilling.

About US$8.5 million in the drilling budget will be spent on the Na Bao exploration project in Qinghai province, which also requires infrastructure set up.

The goal at Na Bao is to define a resource big enough to satisfy the Chinese government’s minimum requirement for a silver-lead-zinc mining permit, which is a 1,000-tonne-per-day operation with a mine life of 10 years.

The last resource estimate at Ying was done in 2006. Measured and indicated resources totaled 812,000 tonnes grading 1,535 grams silver per tonne, 26.48% lead and 8.61% zinc for a total of 40 million oz. silver, 215,000 tonnes of lead and nearly 70,000 tonnes of zinc.

For the Ying and TLP mines, Silvercorp has a 77.5% joint venture with Henan Found Mining, a 70% joint venture with Henan Hua Wei Mining for the HPG and LM mines and an 82% joint venture with Qinghai Found Mining for the Na Bao Project.