Corporate Presentation August 2010 NYSE: SVM

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Corporate Presentation
Corporate Presentation
August 2010
August 2010
NYSE:SVM
1
Safe Harbor Statement under the United States Private SecuritiesLitigation Reform Act of 1995:
Except for the statements of historical fact contained herein, the information presented constitutes "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements, including but not limited to those with respect to the price of silver, lead and zinc, the
possibility, timing and amount of estimated future production, costs of production, reserve determination and reserve conversionrates involve known and
unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of Silvercorp to be materially different from any
future results, performance or achievements expressed or impliedby such forward-looking statements. Such factors include, among others, risks related to
international operations, risks related to Chinese government issuance of mining and related development permits, risks related to joint venture operations, the
actual results of current exploration activities, conclusions ofeconomic evaluations, changes in project parameters as plans continue to be refined, future prices
of silver, lead and zinc, as well as other Risk Factors.
Although Silvercorp has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results
not to be as anticipated, estimated or intended. There can be noassurance that such statements will prove to be accurate as actual results and future events
could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
The shares of Silvercorp Metals Inc. trade on the New York StockExchange (NYSE:SVM) and the Toronto Stock Exchange (TSX: SVM). Neither the NYSE nor
the TSX have approved or disapproved the form or content of thispresentation.
Cautionary Note To U.S. Investors Concerning Estimates Of Measured, Indicated And Inferred Resources
This presentation uses the terms “Measured”, “Indicated”and Inferred”Resources. U.S. investors are advised that while such terms arerecognized and required
by Canadian regulations, the Securities and Exchange Commission does not recognize them. “Inferred Resources”have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will ever be upgraded
to a higher category. Under Canadian rules, estimates of Inferred Resources may not form the basis of feasibility or other economic studies. U.S. investors are
cautioned not to assume that all or any part of Measured or Indicated Resources will ever be converted into reserves. U.S. investors are also
cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.
NYSE:SVM
Cautionary Statements
2
* Silvercorp’s Fiscal Year ends March 31st. Latest quarter ended June 30, 2010.
Capital Structure
NYSE: SVM; TSX: SVM
52-Week Hi/Low: US$9.05/$3.06
Shares Outstanding: 164.9 Million
3-mo Avg. Daily Vol.: 2.0 Million
(NYSE+TSX)
Market Cap.: ~US$1.3 Billion
(Based on share price on August 13, 2010 close) Component of the NYSE Composite,
S&P/TSX Composite and Global Mining
Indexes
NYSE:SVM
Capital Structure & Financial Highlights
No LT Debt; No Hedging
Current Cash Position: US$106 M
US$66.0 MUS$23.2 M
Operating
Cash Flow
CDN$0.02/Share Dividend Paid Quarterly
($0.08 Per Year)
Financial Highlights
Latest
Quarter*
Latest
Fiscal Year*
RevenueUS$36.7 MUS$107.2 M
Net IncomeUS$14.1 MUS$38.5 M
3
62%
43%
35%
72%
0%
20%
40%
60%
80%
Pan American
Silver
Hecla MiningSilver WheatonSilvercorp
Margin %
* Latest Quarter ended June 30, 2010
Silvercorp Sales Mix by Metal
Silver 53%
Lead 38%
Gold 2%
Zinc 7%
NYSE:SVM
￿Lowest cost producer of silver among
industry peers: cash cost was -$6.31
per ounce of silver in Q1/2011
￿Highest gross profit margin among
industry peers: Q1/2011 ￿72%
Industry Leading Profitability
Gross Profit Margin -Latest Quarter*
Peer Comparison of Cash Cost per Oz Silver
Adjusted for By-Product Credits –Latest Quarter*
$5.64
$4.03
($1.82)
($6.31)
($8.00)
($4.00)
$0.00
$4.00
$8.00
Pan American
Silver
Silver
Wheaton
Hecla Mining
Silvercorp
4
Management
Rui Feng,
Ph.D., Geology
Chairman & CEO, Director
Myles J. Gao
,
P.Geo.
President & COO, Director
Maria Tang,
CA, CPA
Chief Financial Officer
Lorne Waldman,
MBA, LL.B.
Corporate Secretary
Shaoyang Shen,
MBA, CMA
General Manager, China Operations
Jack Austin
,
P.C., Q.C., B.A., LL.B.,LL.M
Special Advisor to the Chairman
Board of Directors
Rui Feng
Myles J. Gao
Yikang LiuEarl Drake
Paul SimpsonGreg Hall
Robert Gayton
NYSE:SVM
Dr. Feng & Yikang Liu
Management & Board
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1)Develop mine operations and generate cash flows before the project’s
potential is fully drilled off.
2)Cash flow generated from operations is used to fund further exploration,
resource expansion and production ramp up.
3)Provide benefits to:
i.Local communities through employment and profit sharing;
ii.Local governments through payment of taxes; and
iii.Shareholders through less value dilution.
NYSE:SVM
Silvercorp’s Strategic Vision
Silvercorp’s strategy is to focus on generating cash flows early on by developing
high grade projects that may be too small for large companies and too large for
junior companies:
6
NYSE:SVM
Silvertip Project,
British Columbia, Canada
.
GC Development Project,
Guangdong Province, China
.
Head Office, Vancouver, Canada
.
Silvercorp Operations & Development Projects
Ying Mining District,
Henan Province, China
To produce ~5.3Moz silver
from four mines in FY2011
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NYSE:SVM
Estimated Production (Commodity)
FY2011
Silver5.3 Million oz
Lead83.7 Million lbs
Zinc10.3 Million lbs
Cash Flows from Mine Operations$95-$100 Million*
* Based on Q4/2010 realized sale prices.
Silver Production History & Forecast
Silver Production - Actual and Forecast*
1.94
3.42
3.65
4.16
4.35
4.10
4.17
4.04
0.50
0.55
0.46
0.931.43
1.40
1.45
1.00
2.00
1.00
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
FY2007AFY2008AFY2009AFY2010AFY2011EFY2012EFY2013EFY2014E
Ounces of Silver
Millions
Silvertip
GC
HPG+TLP+LM
Ying
4.20
3.96
1.94
4.62
5.3E
8.5E
5.5E
6.6E
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History
April 2005:Resource defined at Ying
May 2006: Drilling doubles Ying
resources
September 2007:Resource expansion
at Ying and addition of HPG mine
May 2008:Addition of GC/SMT project
resource
November 2008:Addition of TLP and
LM resource
June 2009:Updated GC technical
report increases M&I resources
February 2010:Ying resources
updated and partially converted to P&P
reserves; Addition of Silvertip
resources
Reserve & Resources: FY2004 - FY2010
24.5
72.1
114.6
123.2
18.9
40.1
51.2
59.2
80.0
104.2
57.1
122.7
0
25
50
75
100
125
150
175
200
225
250
275
2004200520062007200820092010
Ounces of Silver (Millions
)
P&P Reserves
M&I Resources
Inferred Resources
43.3
97.1
123.0
163.4
194.7
245.9
NYSE:SVM
Reserve & Resource Growth
* Reserves are included in the Resource number
63.4
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Mill Office
NYSE:SVM
Milling Capacity: 2,500 tpd
Mining Capacity: 1,500 tpd
New 1,500 tpdMill
1,000 tpdMill
Operations: Ying Mining District, Henan Province
YING MINE
HPG Mine
TLP Mine
LM Mine
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•Infrastructure development and partial production underway
•80% JV with Private Chinese Company; Acquired January 2007
HPG
Mine
Ying
Mine
•90% of total production & profits in FY2010
•Produced 4.16Moz Ag, 54.5Mlb Pb & 14.1Mlb Zn in FY2010
•Head grades of 15 oz/t Ag, 8.5% Pb & 3.1% Zn in FY2010
•Cash cost of -$6.66in FY2010
•77.5% JV with Henan Geological Bureau
•Acquired March 2004; Commercial production began April 2006
LM
Mine
•Infrastructure development and partial production underway
•80% JV with Private Chinese Co; Acquired November 2007
TLP
Mine
•Infrastructure development and partial production underway
•77.5% JV w/ Henan Geological Bureau; Acquired Dec. 2007
NYSE:SVM
Ying Mining District –Summary of Mines
Ying Mine
11
NYSE:SVM
￿Acquired June 2008; 95% JV with
Private Chinese Company
￿M&I Resource of 28.5Moz Silver, 95K
tonnes Lead and 214K tonnes Zinc
￿Inferred Resource of 30.8Moz Silver,
115K tonnes Lead and 213K tonnes
Zinc
￿Expect to receive mining permit in
October, 2010
￿Mine & Mill Design close to completion,
equivalent to a Canadian Feasibility
Study
￿Projected capital cost: $30 million
￿$20 million: mine development
￿$10 million: mill construction
￿To produce 2Moz Silver per year and
40M lbs Lead & Zinc
GC Development Project –2
nd
Base for Growth
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NYSE:SVM
Drill Program
GC Development Project –High Growth Potential
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NYSE:SVM
￿100% owned project; Acquired February 2010
￿High-grade silver-lead-zinc Carbonate Replacement
Deposit (CRD) surrounded by ~800 km2
mineral rights
in mining friendly BC, Canada
￿Only 1 km2
has been explored ￿great potential to
grow the size of the deposit
￿Can be put into production quickly with minimal initial
capital, generating cash flows to finance expansion of
resource + production and to benefit local communities
early on
￿New base for growth plus geographic diversification
2010 Resource Estimate (at >400 g/tsilver equivalent cut-off)
Resource Category
Tonnes
Silver (g/t)
In Situ Contained Silver (oz)
Lead (%)
Zinc (%)
Gold (g/t)
Indicated1,976,664398
25,263,5187.6510.350.58
Inferred357,713413
4,747,3907.5011.050.26
Silvertip Project –Upcoming High-Grade Silver Mine in BC
* Silver Equivalent is calculated using metal prices of US$12.13/oz Ag, US$728/oz Au, US$0.804/lb Pb and US$0.847/lb Zn and metal recoveries of
69.2% for silver, 80.4% for lead, 84.7% for zinc and 50% gold.
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NYSE:SVM
￿Over $40 million already spent on
exploration: work included 2.4 km
of tunnel development and 71,472 m
of surface/underground drilling in
491 holes from 1955 -2000
￿Project was put on hold since 2000
￿High-grade starter pockets (>1,000
g/tAgEqor US$550 NSR)
accessible from existing tunnels
￿BC Provincial Small Mine Permit
can be obtained within 12 months
and allows shipment of approx.
75,000 tonnes of product per year
￿Capital cost estimated at approx.
$25 million
Silvertip Project –Current Development Status
Cross sections on next slide
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NYSE:SVM
Extremely High-Grade Intercepts
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NYSE:SVM
“We will apply the same successful strategy we used at
our Ying mine in China to the Silvertip Project…”
￿Early Production
:apply for Small Mine Permit to mine
high-grade starter pockets accessed from existing tunnels
(see slide 10).
￿At current metal prices, starter pockets contain ~209,000
tonnes of ore valued at ~$550/tonne after mill recovery &
smelter charges.
￿High value per tonne ore allows for two options: 1) built a
new mill on siteor 2) direct shipment to mills in China.
￿Bootstrap Growth:
Cash flows from this operations will be
able to finance further exploration to expand resource, a full
feasibility study, a full mining permitting
process
and future
expansion of operations.
￿Regional Exploration
:Conduct regional exploration
outside the existing resource area to identify new drill
targets .
Access by 25 km road from Alaska Highway
Silvertip –Production and Exploration Plan
Core Shack
17
NYSE:SVM
Strong Resource Growth Potential at Silvertip
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NYSE:SVM
Project/Mines
Description
FY2011
Ying Mine
Exploration, Development and
Mill
$7 Million
TLP, LM & HPG Mines
Development and Remaining
Acquisition Cost
$6 Million
GC Project
Permitting & Mine/Mill
Construction
Pending Receipt of Mining
Permit
Silvertip Project
Permitting, Exploration
Programs, Mine Development
$4 -5 Million
Total Capital Expenditures Budget for Fiscal 2011: $17 -25 Million
All expenditures to be financed by internally generated cash flows from
operations of approximately $95 -$100 M for FY2011
Capital Expenditure Budget
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NYSE:SVM
RESOURCE CATEGORY
Resource
(Tonnes)
Contained Metal Resources
Ag (oz)
Pb (t)
Zn (t)
Ag Equiv.* (oz)
Ying Mining District Resources (Inclusive of Reserves)
M & I5,126,73468,957,225419,332128,037132,255,074
Inferred 6,168,76387,725,328584,404185,238178,364,808
GC Project Resources
M&I6,408,00028,487,40095,560214,15071,163,200
Inferred7,892,00030,774,200114,570213,38075,962,400
Silvertip Project Resources
Indicated1,976,66425,263,518151,215204,58558,779,927
Inferred 357,7134,747,39026,82839,52710,878,617
Consolidated Resources (INCLUSIVE OF RESERVES)
M&I
13,883,789
122,708,143
666,107
546,772
262,198,201
Inferred
14,520,659
123,246,918
725,802
438,145
265,205,825
Summary of Reserves/Resources
RESERVE CATEGORY
Resource
(Tonnes)
Contained Metal Reserves
Ag (oz)
Pb (t)
Zn (t)
Ag Equiv.* (oz)
Proven1,322,20117,182,882101,53230,09332,347,159
Probable4,820,40846,171,138283,30587,46689,224,423
Total
6,142,609
63,354,020
384,837
117,559
121,571,582
* Based on Ying Mining District Technical Report filed February 2010; GC Technical Report from June 2009; and Silvertip Technical Report from February 2010. Ag equivalent for Ying
District is calculated based on US$6.50/oz Ag, $0.40/lb Pb and $0.45/lb Zn. Ag equivalent for GC project is calculated based onUS$12/oz Ag, $0.75/lb Pb and $0.75/lb Zn. Ag
Equivalent at Silvertip is calculated using metal prices of US$12.13/oz Ag, US$728/oz Au, US$0.804/lb Pb and US$0.847/lb Zn and metal recoveries of 69.2% for silver, 80.4% for lead,
84.7% for zinc and 50% gold.
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Suite #1378 -200 Granville St., Vancouver, BC, Canada V6C 1S4
Tel: 604-669-9397 | Fax: 604-669-9387 | Toll-Free: 1-888-224-1881
Email:info@silvercorp.ca
Website: www.silvercorpmetals.com
INVESTOR RELATIONS: investor@silvercorp.ca
Head Office
China Offices
Suite 601 –Building 1, China View Mansion, #A2 East GongTiRoad
ChaoyangDistrict, Beijing, China 100027
Tel: 86-10-8587-1130 | Fax: 86-10-8587-1132
Henan Found Mining -XinDe KeJiPlaza, Jin ShuiDong Road
Zhengzhou City, Henan Province, China 450052
Tel: 86-371-797-1169 | Fax: 86-371-797-1570
Silvercorp’s disclosure
documents are available
from the System for
Electronic Document
Analysis and Retrieval
(SEDAR) at
www.sedar.com
NYSE:SVM
Contact Information