Silvercorp Metals Inc. is pleased to announce that it has received the necessary Chinese government approvals, including Chinese military clearance, to acquire a 70% equity interest in Yunxiang Mining Co. Ltd. (Yunxiang), a private mining company in Hunan Province, China. Yunxiangs primary asset is the BYP Gold-Lead-Zinc mine (the BYP mine), located 220 km, or a 3 hour drive, southwest of Changsha, the capital city of Hunan Province, China. The BYP mine has a mining permit covering 3.67 km2, a safety production permit, and a 400 tonne per day (t/d) floatation mill. As a result of this acquisition, Yunxiang is now converted into a Sino-Foreign joint venture company and Silvercorp has now taken over the control of Yunxiang.
Pursuant to the share purchase agreement and Sino-Foreign cooperative joint venture contract, the total consideration for the 70% interest is USD$33 million. Silvercorp has paid USD$19 million to the owner, representing 80% of the
ball mill required payment for the share purchase, and is required to make USD$9 million equity capital investment to Yunxiang. Silvercorp will make payment of the remaining 20% share purchase payment (USD$5 million) after certain conditions, including completion of a government tax audit of Yunxiang, are satisfied.
Silvercorp intends to utilize the existing 400 t/d floatation mill to mine and process gold mineralizations starting from fiscal 2012, initially, focusing on higher grade materials. Concurrently, Silvercorp plans to expand the mining and milling capacity to 1,000 t/d gold mineralization for fiscal 2013 and to 2,000 t/d (1,000 t/d gold mineralization and 1,000 t/d lead-zinc mineralization) by fiscal 2014.A 50,000 metre drilling program has been planned for the BYP project, with the intent of upgrading the current historical resources and expanding the mineralization bodies along strike and down-dip.
The completion of this acquisition marks another significant step for Silvercorps growth in China, allowing Silvercorp to establish a third base for production in a prominent polymetallic belt with a mixed production of precious
ball mill and base metals. The acquisition fits Silvercorps strategy of acquiring precious metal projects that it expects can generate healthy cash flows before the project is fully explored and developed, so that further resource expansion and production growth can be financed by internal cash flow. This will also enable Silvercorp to further establish its reputation as an efficient producer and enhance its ability to consolidate other producing mines and exploration projects in the region.
Myles Gao, P. Geo, is the Qualified Person on the project as defined under National Instrument 43-101. He has verified the information and has reviewed and approved the contents of this news release.Salazar Resources Ltd. Mr. Fredy Salazar, President and CEO, is pleased to announce that Salazar Resources Ltd. has acquired a second diamond drill rig to accelerate the exploration program at its Curipamba Project in Ecuador.
The second rig is a new Hydracore 4000 hydraulic diamond drill with a depth capacity of 500 meters and 1000 meters for HQ core and NQ core respectively. While significantly greater capacity than the Hydracore 2000 currently owned by Salazar, the power pack has been modified to utilize 3-60 HP diesel engines to limit maximum module weight and to allow the unit to remain man portable. The second drill
ball mill will be allocated to exploration drilling on previously identified exploration targets at Curipamba while the first drill will remain dedicated to the delineation and extension drilling of the El Domo deposit.
Fredy Salazar, President of Salazar Resources Ltd., stated, The success of exploration drilling at the gold rich El Domo copper-zinc deposit has necessitated that one drill remain dedicated to advance resource definition and to test adjacent exploration targets as quickly as possible. The addition of a second drill will allow us to ramp up our overall exploration
ball milleffort in parallel to the El Domo drilling and drill test approximately fifteen additional and highly prospective targets, some of which have similar characteristics to El Domo. The exploration targets for the second drill are currently being prioritized based upon their geophysical, geochemical and geological signatures.
