NYSE: SVM. Corporate Presentation March 2010

Transcription

1 Corporate Presentation March 2010

2 Cautionary Statements Safe Harbor Statement under the United States Private Securities Litigation 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 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 conversion rates 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 implied by 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 of economic 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 no assurance 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 Stock Exchange (NYSE:SVM) and the Toronto Stock Exchange (TSX: SVM). Neither the NYSE nor the TSX have approved or disapproved the form or content of this presentation. 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 are recognized 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. 1

3 Silvercorp s Strategic Vision Silvercorp has built a record of success 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) Cash flow generated from operations is used to fund further exploration, resource expansion and production ramp up. Silvercorp s goal is to focus on profitability while building a long-term growth base financed by internal cash flows. 2

4 Management & Board Management Rui Feng, Ph.D., Geology Chairman & CEO, Director Myles J. Gao, P.Geo. President & COO, Director Maria Tang, CA, CPA Interim Chief Financial Officer Lorne Waldman, MBA, LL.B. Corporate Secretary Rui Feng Dr. Feng & Yikang Liu Board of Directors Myles J. Gao 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 Yikang Liu Paul Simpson Robert Gayton Earl Drake Greg Hall 3

5 Silvercorp Operations & Development Projects GC Development Project, Guangdong Province, China Ying Mining District, Henan Province, China To produce ~5.3Moz silver from four mines in FY2011 Silvertip Project, British Columbia, Canada Head Office, Vancouver,. Canada.. 4

6 Operations: Ying Mining District, Henan Province Milling Capacity: 2,500 tpd Mining Capacity: 1,500 tpd 1,000 tpd Mill YING MINE New 1,500 tpd Mill Mill Office 5

7 GC Development Project 2 nd Base for Growth 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 Under Mining Permit Application Process Mine & Mill Design underway, equivalent to a Canadian Feasibility Study Projected capital cost to be $30 million - $20M for mine development; $10M for mill construction 6

8 GC Development Project High Growth Potential Drill Program 7

9 Silvertip Project Advanced Stage Silver-Lead Zinc Project in BC 216 km 2 land package in northern BC, Canada. Easy access by 25-km road from Alaska Hwy and located 442 km from sea port. One of the highest grade silver-lead-zinc carbonate replacement deposits (CRDs) in North America with great potential to grow. Fits Silvercorp s strategy of developing high-grade deposits that can be brought into production quickly with minimal initial capital advantages include early cash flow generation to finance further project expansion and early benefits to local communities. New platform for growth plus geographic diversification. Resource Category Indicated Inferred 2010 Resource Estimate (at >400 g/t silver equivalent cut-off) Tonnes 1,976, ,713 Silver (g/t) In Situ Contained Silver (oz) 25,263,518 4,747,390 Lead (%) Zinc (%) Gold (g/t) * 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

10 Silvertip Project Exploration/Development History Project was explored by various operators/owners from 1955 to More than $40 million in exploration work was carried out, including 2.4 km of underground tunnel development and 71,472 m of surface/underground drilling in 491 holes. Silver Standard acquired the project in 2002 but did no exploration work. Other CRDs with similar characteristics have ranged in size from 11.7 million tonnes to approx. 30 million tonnes. High grade starter pockets (>1000g/t Ag Eq.) easily accessible from existing tunnels. Cross sections on next slide 9

11 Silvertip Cross sections showing high grade starter pockets 10

12 Silvertip The Silvercorp Way We will apply the same successful strategy we used at our Ying mine in China to the Silvertip Project Early Production: Start production before full potential is drilled off apply for a BC Small Mine Permit with operating capacity of 75,000 tonnes per year to mine high-grade starter pockets accessed from existing tunnels (see slide 10). Using current metal prices, starter pockets contain ~209,000 tonnes of ore valued at ~$550/tonne after mill recovery. High value per tonne ore allows for three milling options: 1) direct shipping to mills in China; 2) transport to existing mills within 200 km of project; or 3) a new mill to be built on site. Bootstrap Growth: Anticipated cash flows from early operations will finance further exploration programs, a full feasibility study, a full mining permitting process and future expansion of operations. Exploration: Conduct a regional exploration program outside the existing resource area to identify new drill targets to grow the project. Easy access by 25 km road from Alaska Highway Stockpiled ore 11

13 Silver Production History & Forecast Ounces of Silver Millions Silvertip GC HPG+TLP+LM Ying Silver Production - Actual and Forecast* E 5.3E 5.5E 6.6E E FY2007A FY2008A FY2009A FY2010E FY2011E FY2012E FY2013E FY2014E Estimated Production (Commodity) Silver Lead Zinc Cash Flows from Mine Operations * Based on Q3/2010 realized sale prices. FY Million oz 83.7 Million lbs 10.3 Million lbs $90-$100 Million* 12

14 Reserve & Resource Growth 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 Ounces of Silver (Millions) Reserve & Resources: FY FY2010 P&P Reserves M&I Resources Inferred Resources * Reserves are included in the Resource number 63.4* 13

15 Capital Expenditures Budget Project/Mines Ying Mine TLP, LM & HPG Mines GC Project Silvertip Project Description Exploration, Development and Mill Development and Remaining Acquisition Cost Permitting & Mine/Mill Construction Permitting, Exploration Programs, Mine Development FY2011 $7 Million $6 Million Pending Receipt of Mining Permit $1-2 Million Total Capital Expenditures Budget for Fiscal 2010: $15-25 Million All expenditures to be financed by internally generated cash flows from operations of approx. $90 - $100 M for FY

16 Capital Structure & Financial Highlights Capital Structure NYSE: SVM; TSX: SVM 52-Week Hi/Low: $8.00/$1.95 Shares Outstanding: Million 3-mo Avg. Daily Vol.: 2.3 Million (NYSE+TSX) Basic Market Cap.: ~$1.07 Billion (Based on share price on Feb. 26, 2010 close) Component of the NYSE Composite and S&P/TSX Composite and Global Mining Indexes Financial Highlights for Q3/FY2010 Revenue: $31.3 Million (FY2009: $83.5M) Net Income: $12.4 Million (FY2009: $27.3M*) Cash Flow: $15.9 Million (FY2009: $47.0M) Cash Position: $87.8 Million No LT Debt; No Hedging CDN$0.02/Share Quarterly Dividends All amounts in US Dollars unless otherwise stated. * Adjusted Net Income. Please see May 14, 2009 News Release. 15

17 Industry Leading Profitability Lowest cost producer of silver among industry peers: cash cost was -$7.73 per ounce of silver in Q3/2010 (FY2009:-$2.77) Highest gross profit margin among industry peers: Q3/ % Silvercorp Sales Mix by Metal US$ $9.00 $4.00 -$1.00 -$6.00 Cash Cost per Oz Silver Adjusted for By-Product Credits - Latest Quarter* $5.53 Pan American Silver $3.97 Silver Wheaton -$2.00 Hecla Gross Profit Margin - Latest Quarter* -$7.73 Silvercorp Silver 51% Lead 39% Margin % 100% 80% 60% 40% 20% 0% 31% 41% 54% 77% Gold 1% Zinc 9% Pan American Silver * Latest Quarter ended December 31, 2009 Hecla Mining Silver Wheaton Silvercorp 16

18 Summary of Projects District Mine/Ownership Status Ying 77.5% JV with Henan Geological Bureau Acquired March 2004; Commercial production began April 2006 Full Production Ying Mining District, Henan Province, China LM TLP HPG 70% JV with Private Chinese Company Acquired November 2007; Partial production in progress 77.5% JV with Henan Geological Bureau Acquired December 2007; Partial production in progress 70% JV with Private Chinese Company Acquired January 2007; Partial production in progress Partial Production/ Mine Development GC Project, Guangdong Province, China 95% JV with Private Chinese Company Under permit application process; mine and mill construction planned in with production expected for 2012 Mine Permit Application Silvertip Project, British Columbia, Canada 100% Owned Small Mine Permit application process; goal of production in 2012 Mine Permit Application 17

19 Summary of Reserves/Resources Resource Contained Metal Reserves RESERVE CATEGORY (Tonnes) Ag (oz) Pb (t) Zn (t) Ag Equiv.* (oz) Proven 1,322,201 17,182, ,532 30,093 32,347,159 Probable 4,820,408 46,171, ,305 87,466 89,224,423 Total 6,142,609 63,354, , , ,571,582 RESOURCE CATEGORY M & I Inferred M&I Inferred Indicated Inferred M&I Resource (Tonnes) 5,126,734 6,168,763 6,408,000 7,892,000 1,976, ,713 13,883,789 Contained Metal Resources Ag (oz) Pb (t) Zn (t) Ag Equiv.* (oz) Ying Mining District Resources (Inclusive of Reserves) 68,957,225 87,725,328 GC Project Resources 28,487,400 30,774,200 25,263,518 4,747,390 Consolidated Resources 122,708, , ,404 95, ,570 Silvertip Project Resources 151,215 26, , , , , , ,585 39, , ,255, ,364,808 71,163,200 75,962,400 58,779,927 10,878, ,198,201 Inferred 14,520, ,246, , , ,205,825 * Based on Ying Mining District Technical Report filed February 2010; GC Technical Report from June 2009; and Silvertip Technical Report from February 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 on US$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. 18

20 Contact Information Head Office Suite # Granville St., Vancouver, BC, Canada V6C 1S4 Tel: Fax: Toll-Free: Website: China Offices Suite 601 Building 1, China View Mansion, #A2 East GongTi Road Chaoyang District, Beijing, China Tel: Fax: Henan Found Mining - Xin De Ke Ji Plaza, Jin Shui Dong Road Zhengzhou City, Henan Province, China Tel: Fax: Silvercorp s disclosure documents are available from the System for Electronic Document Analysis and Retrieval (SEDAR) at 19