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Operations

GC Mine

  • Introduction
  • Ownership
  • History

Introduction

Silvercorp acquired the Gaocheng ("GC") silver-lead-zinc exploration permit in April 2008. Located about 200 kilometres west of Guangzhou City, Guangdong Province, southern China, the permit covers an area of 5.5 km2. Since 2001, the GC permit has been explored for gold, silver, lead, zinc, and sulphur. In December 2010, Silvercorp received a mining permit on the GC project and construction of a 1,600 tpd mine and mill commenced shortly thereafter.  In the fall of 2014 the Company commenced commercial production from the mine. Since then, GC project has contributed 2.3M ounces of silver and 75.2M pounds of lead and zinc ended March 31, 2018.

Ownership

The GC exploration permit is 100% owned by Anhui Yangtze Mining Co. Ltd., ("Anhui Yangtze") a sino-foreign cooperative JV company owned 95% by Silvercorp (through a wholly owned subsidiary). The cost to acquire the interest was approximately US$60.27-million and was paid for 40% in cash ($24-million) and 60% in common shares of Silvercorp (4,532,543 common shares of the company were issued at CAD$8.20 per share). In addition to the GC exploration permit, Anhui Yangtze also owns 100% of the nearby 9.5km2 Shimentou silver-lead-zinc exploration permit.

History

Since 1959, extensive systematic geological mapping, airborne magnetic surveys, stream sediment geochemical surveys, local IP surveys and trenching was conducted by provincial geological bureau teams. A total of 43 diamond drillholes for a combined total of 13,463.74 m were drilled on the GC property between 2001 and 2007 prior to the property acquisition by Silvercorp. More comprehensive exploration work by Silvercorp on the GC property was carried out between 2008 and 2017 and completed 177,599 m drilling and 1,088 drillholes. Please refer to the 2018 GC technical report completed by AMC Mining Consultants (Canada) Ltd. for further information.

Geology

The GC property is located on the east margin of the Luoding basin, east of the Wuchuan – Sihui major fault within the north portion of the Yunkai uplift of the South China Orogenic Belt. Northeast striking structures and arc structures form the basic geological framework of the region. Deposits on the property occur at the intersection of a north-easterly striking fault zone and a near east-westerly striking fault zone.

Basement geology in the area comprises late Proterozoic Sinian sedimentary clastics and carbonate rocks; Palaeozoic (Ordovician, Silurian, Devonian, Carboniferous) sedimentary clastics and carbonate rocks; and Mesozoic (Triassic) coal-bearing clastic rocks and Cretaceous red clastic rocks. Ag-Pb-Zn poly-metallic deposits occur within late Proterozoic rocks. Cu-Pb-Zn, Mn, and Au-Ag deposits occur within Palaeozoic rocks.

The GC Project is located at the intersection between the Wuchuan-Sihui Deep Fault zone and Daganshan Arc-ring structural zone. It is situated in the southwest part of the Daganshan uplift. Structures developed in the area are mainly the NWW-EW striking Gaocheng Fault zone, the NE striking Baimei Fault zone, and the Songgui Fault zone.

Basement rocks within the GC Project area encompass quartz sandstone, meta-carbonaceous siltstone, carbonaceous phyllite, calcareous quartzite, and argillaceous limestone of the Sinian Daganshan Formation; quartz sandstone and shale of the Triassic Xiaoyunwushan Formation, and sandy conglomerate and conglomerate of the Cretaceous Luoding Formation. These rocks are intruded by Palaeozoic gneissic, medium-grained biotite granite, and Mesozoic fine- to medium-grained adamellite, brownish, fine‑grained, biotite mylonite, granite porphyry, quartz porphyry, diabase, and aplite. The Mesozoic intrusives intruded along the south and southwest contacts of the Palaeozoic granites. The majority of Ag-Zn-Pb mineralization is hosted by the Mesozoic granite. The granite dips south and strikes west northwest, parallel to the majority of mineralized veins on the GC property.

Mineralization at GC is primarily hosted within a WNW-ENE trending, 4.8 km long and 2 km wide fault zone. This zone encompasses numerous veins which strike between 112° and 146° and dip between 65° to the southwest and sub-vertical. The average thickness of these veins is 0.89 m.

Mineral Resources:

The Mineral Resource estimates for the Gaocheng property were prepared by Mr Shiping Yin, Resource Geologist of Silvercorp, and were reviewed by independent Qualified Person, Ms. Dinara Nussipakynova, P.Geo of AMC who takes responsibility for the estimates. As a result of a recommendation in the 2012 Technical Report, the December 2017 Resources were estimated using a block modelling approach, with MicromineTM software. Interpolation was carried out using inverse distance cubed (ID3) for all the veins. Estimates were made for a total of 89 mineralized vein structures for the Gaocheng property.

The Mineral Resources are reported above a cut-off of 100 g/t silver equivalent (AgEq). Cut-off grades are based on in situ values in AgEq terms in grams per tonne (after application of mining recovery and payable values) and incorporate all mining and processing costs provided by Silvercorp and reviewed by AMC.

The estimated Mineral Resources and metal content for the property as of December 31, 2017 are detailed in Table 1 below.

Table 1   Gaocheng Property - Measured & Indicated, and Inferred Mineral Resources

(Inclusive of Mineral Reserves)

Resource Classification Tonnes (Mt) Ag (g/t) Pb (%) Zn (%) Contained Metal
Ag (koz) Pb (Mlbs) Zn (Mlbs)
Measured 2.735 101 1.4 3.2 8,840 84 195
Indicated 3.638 92 1.2 2.7 10,818 98 217
Measured and Indicated 6.374 96 1.3 2.9 19,658 181 412
Inferred 7.481 107 1.2 2.6 25,662 196 429

Notes: CIM Definition standards (2014) were used for reporting the Mineral Resources

Mineral Resource are reported at a cut-off grade of 100 g/t AgEq.

The equivalency formula is Ag g/t+44.6*Pb%+43.5*Zn% using prices of $19/oz Ag, $1.00/lb Pb and $1.25/lb Zn and estimated recoveries of 77% Ag, 86% Pb, and 83% Zn.

Drilling results up to December 31, 2017.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

The numbers may not compute exactly due to rounding.

Source: Silvercorp, reproduced as a check by AMC Mining Consultants (Canada) Ltd.

Mineral Reserves

The Mineral Reserve estimates for the Gaocheng property were prepared by Silvercorp under the guidance of independent Qualified Person, Mr. H. A. Smith, P.Eng, who takes QP responsibility for those estimates. The assumption has been made that current stoping practices will continue to be employed at the Gaocheng property, namely predominantly shrinkage stoping but also with a relatively small amount of cut and fill resuing, using hand-held drills and hand-mucking within stopes, and loading to mine cars by rocker-shovel or by hand. Minimum mining widths of 1.0 m for shrinkage and 0.5 m for resuing are assumed.

Average dilution beyond planned mining widths has been estimated at 13%, while assumed mining recovery factors are 92% for shrinkage stopes and 95% for resuing stopes.

The Gaocheng NI 43-101 Technical Report defines Mineral Reserves of 3.56 million tonnes in the Proven and Probable categories grading 96 g/t Ag, 1.4% Pb, and 3.1% Zn, containing 11 million ounces silver, 112 million pounds lead, and 240 million pounds zinc. Mineral Reserve tonnes are noted to be 56% of Mineral Resource (Measured plus Indicated) tonnes. Silver, lead and zinc Mineral Reserve grades are 100%, 110% and 104% respectively of the corresponding Measured plus Indicated Mineral Resource grades. Metal content conversions for silver, lead and zinc from Measured plus Indicated Mineral Resources to Proven plus Probable Mineral Reserves are 56%, 62% and 58% respectively.

Table 2   Gaocheng Property - Mineral Reserves

Reserve classification Tonnes (Mt) Ag (g/t) Pb (%) Zn (%) Contained metal
Ag (koz) Pb (Mlbs) Zn (Mlbs)
Proven 1.691 96 1.4 3.2 5,219 53 120
Probable 1.873 97 1.4 2.9 5,841 58 121
Proven + Probable 3.564 96 1.4 3.1 11,000 112 240

Notes to Mineral Reserve Statement:

Full breakeven cut-off grades: Shrinkage = 180 g/t AgEq: Resuing = 245 g/t AgEq.

Marginal material cut-off grade: 145 g/t AgEq.

Dilution (zero grade) assumed as 0.1 m on each wall of a shrinkage stope and 0.05 m on each wall of a resuing stope.

Mining recovery factors assumed as 95% for resuing and 92% for shrinkage.

Metal prices: Silver US$19/troy oz, lead US$1.00/lb, zinc US$1.25/lb.

Processing recovery factors: Ag – 77%, Pb - 86%, Zn – 83%.

Effective date December 31, 2017.

Exchange rate assumed is RMB 6.50: US$1.00.

Rounding of some figures may lead to minor discrepancies in totals.

Please refer to 2018 GC Technical Report prepared by AMC Mining Consultants (Canada) Ltd for further information on the Project.

Exploration

Exploration work by Silvercorp on the GC property was carried out between 2008 and 2017. In 2008, Silvercorp completed a 22-hole (10,082.6 m) drilling program, which resulted in the discovery of 15 mineralized veins. In addition, a comprehensive exploration program including soil geochemical survey, geological mapping, surface trenching and pitting were also performed in 2008.

Between 2011 and 2017, a total of 1,066 diamond drillholes (167,516 m) were completed. This total includes 962 underground diamond drillholes and 104 surface diamond drillholes.

Underground tunnelling programs comprising 40,862 m of tunnelling were completed on the GC property between 2012 and 2017. These programs comprised 27,403 m of drifting along mineralized structures, 7,292 m of crosscutting across mineralized structures, and 6,167 m of raises. The intensive exploration programs by Silvercorp targeted major vein structures (such as V28, V9W-2, V9-3, V2, V7, V10) with surface drilling, underground drilling and tunneling, which resulted in significant discovery of new mineralized veins and resources upgrading.

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