VANCOUVER — China-focused silver miner Silvercorp Metals (SVM-T, SVM-N) had a busy year in 2012 on the exploration front, and has released a myriad of results over the past eight weeks that cover 80,000 metres of drilling over three mines located in the Ying district in China’s Hunan province. Since kick-starting production in 2006, Silvercorp has increased its daily milling capacity at Ying to 3,200 tonnes at two flotation mills, and the company believes its exploration efforts show a potential for reserve and resource expansion.
Silvercorp’s largest exploration initiative focused on its flagship SGX silver-lead-zinc mine, 240 km southwest of the city of Zhengzhou. The company owns 77.5% of the project along with joint-venture partner Henan Non-Ferrous Geological & Mineral Resources. SGX hosts 27 known mineralized veins, which tend to occur in sets and are enclosed by steeply dipping fault-fissure zones that extend for hundreds to a few thousand metres along strike.
Silvercorp cut 52,000 metres of diamond drilling underground at SGX in 2012, with another 1,800 metres drilled from surface. Underground exploration was aimed at expanding and upgrading existing drill-defined resource blocks and testing for mineralization in the unexplored portions of major vein structures.
The company also completed 11.5 km of tunnelling at the site that cut along and across production veins.
The company says that exploration at SGX indicated downdip and strike consistency in relation to its production veins, and extended high-grade mineralization within 10 vein structures hosted between 610-metre and 260-metre elevations. Highlights from underground drilling include: 3 metres grading 451 grams silver per tonne; 0.2% lead and 0.5% zinc at 626 metres elevation in hole 15S7-104; and 1.1 metres of 1,274 grams silver, 15% lead and 3% zinc at a 589-metre elevation in hole 7-102.
Silvercorp had more success during its tunnelling, including drift 105-S2-340 on the 340-metre level, which revealed a 45-metre-long zone grading 988 grams silver, 13% lead and 3.3% zinc. The company intends to incorporate its results into an upcoming resource and reserve update at SGX.
East of SGX sits Silvercorp’s TLP silver-lead-zinc operation, where the company completed 23,700 metres of underground drilling during the past year, as well as another 12 km of tunnelling. The company was again aiming for resource expansion, though in TLP’s case drilling involved stepout and infill holes at shallow elevations on the upper portions of the major production veins. Silvercorp established the strategy during the second half of 2012, and has since used it to identify new veins.
Seven new vein structures were discovered at TLP as a result of Silvercorp’s underground exploration in 2012, with results highlighted by 1.9 metres grading 1,669 grams silver at 877 metres elevation in hole 331; 1.54 metres of 1,016 grams silver at 922 metres elevation in hole 1731; and 3.6 metres averaging 233 grams silver, 2% lead and 0.6% zinc at 838 metres elevation in hole 404.
Meanwhile, southeast of SGX lies Silvercorp’s LM silver-lead-zinc mine, where the company sunk over 5,000 metres of underground drilling during the second half of 2012, with 14 of 23 holes intersecting high-grade mineralization in the upper portions of current production veins. A 4,000-metre drift program extended the strike lengths of known mineralized zones between 600- and 850-metre elevations, within major production vein LM5.
Highlights from LM’s program include: drift 900-LM5-750,where Silvercorp revealed a 147-metre zone of 858 grams silver, 2.11% lead and 0.43% zinc; 1.4 metres of 1,872 grams silver, 3.6% lead and 0.41% zinc at 690 metres elevation in hole 1002; and 1.8 metres averaging 2,649 grams silver, 1.88% lead and 0.63% zinc at 726 metres elevation in hole 51S32.
Silvercorp spent US$29 million on exploration during 2012. During the fiscal year, Silvercorp produced 4.97 million oz. silver and 12,500 oz. gold for net income of US$37 million, or 22¢ per share. The company has been hit by falling silver prices, however, with its stock down around 42%, or $2.20 per share since the beginning of 2013.
Silvercorp has traded within a 52-week range of $2.56 and $6.88. The company closed at $2.98 at press time, with 170 million shares outstanding for a $511-million market capitalization.