Facilitated by China's 1997 Mineral Resource Law (click here), Silvercorp first entered China in 2003 to capitalize on the country's vastly underexplored geological potential. While the Chinese government invested tremendously in geological exploration in the 1950s and 1960s, leading to many discoveries, very little capital or advanced exploration technology were available to exploit them fully. China's 1997 Mineral Resource Law was adopted specifically to enable foreign mining companies to explore and mine in the country -- inviting in the advanced exploration technology, expertise and funding China needed to truly develop its tremendous resources.
In 2004, Silvercorp acquired the Ying project, a small producing mine in the Henan province, and exploration over the next two years led to the discovery of exceptionally high-grade silver-lead-zinc mineralization in a multitude of narrow veins similar to the prolific Coeur d'Alene silver district in Idaho, U.S.A. On March 31, 2006, Silvercorp received its first mining permit from the Ministry of Labour & Resources and commercial production of silver, lead and zinc from the Ying mine began the next day.
Today, Silvercorp is China's largest primary silver producer, achieving production of approximately four million ounces of silver in fiscal 2008. Due to the exceptionally low costs of operating in China, along with the high efficiency of a skilled labour force, Silvercorp has enjoyed industry-leading profitability and returns among its industry peers. In fiscal 2008, the company generated net profits of $59.9-million on sales of $108-million, representing earnings of $0.41 per share. As testament to its profitability - and a demonstration of its ability to repatriate profits - the company paid its first annual dividend to shareholders of $0.05 per share on October 21, 2007.
Following upon its success at the Ying mine, Silvercorp acquired three nearby mines and consolidated the district in 2007. The company now has four mining permits in the Henan province along with a newly acquired development project in the Guangdong province, which is currently in the mining permit application process. In addition to its operational success Silvercorp is considered a preferred mining company in the Henan district, having built a solid reputation for upholding high safety and environmental standards and supporting local community initiatives. Silvercorp plans on continuing its growth through increasing mine capacity and production, resource expansion and continuing acquisitions with a focus in China.
Silvercorp is listed on the Toronto Stock Exchange under the symbol "SVM", and is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia and New Brunswick, Canada. The company is also a reporting issuer in the United States and commenced trading on the New York Stock Exchange under the symbol "SVM" on November 5, 2009. Prior to the NYSE listing, the company traded on the NYSE Amex beginning on Feb. 17, 2009.
The Company was formed as Spokane Resources Ltd. pursuant to an amalgamation of Julia Resources Corporation and MacNeill International Industries Inc., under the British Columbia Company Act, on October 31, 1991. By special resolution dated October 5, 2000 Spokane Resources Ltd. consolidated its share capital on a 10:1 basis and altered its Memorandum and Articles of Incorporation by changing its name to SKN Resources Ltd. On May 2, 2005, the Company filed a Notice of Alteration with the Registrar of Companies changing its name from 'SKN Resources Ltd.' to 'Silvercorp Metals Inc.'.
Prior to being listed on the Toronto Stock Exchange on October 24, 2005, Silvercorp Metals was listed on the TSX Venture Exchange from July 26, 2001, to May 1, 2005.
Myles Gao, President and COO of Silvercorp, joined the company as a director on November 25, 2002, just before the company acquired its first project in China. Dr. Rui Feng,Chairman CEO, joined on September 5, 2003.
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.
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.
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