SILVERCORP METALS INC
Mining a Bright Future in China
IN ASSOCIATION WITH
DIGITAL REPORT 2021
Mining a Bright Future in China 02
03
www.si l ve rc o rpme t a ls . com
SILVERCORP METALS INC
How the Canadian miner is balancing profitability, social and environmental responsibility, employee wellbeing and sustainable development
S
ilvercorp is an innovative and unique Canadian mining company with roots in the far east. Founder Dr. Rui Feng took his
early geological studies in China before completing his doctorate in Saskatchewan, where he was drawn to Canada’s mining industry. After settling in Vancouver, and working on technical reports for 04
junior mining companies that were going public, Dr. Feng fell in love with the idea of building an entrepreneurial mining company. By taking control of a listed shell company, and using his network of contacts in China, he set about finding attractive assets to put in it. Dr. Feng is a successful entrepreneur and explorer with over 25 years of global industry experience acquiring mining opportunities worldwide. He was integral in discovering Jinshan Gold’s CSH Gold Mine in China in 2002, which was acquired by China Gold International. Dr. Feng founded Silvercorp in 2003 and acquired early-stage projects in China’s Ying mining district. Through discovery and development, Silvercorp has become one of the most profitable Canadian mining companies, with multiple mines in China.
05
www.si l ve rc o rpme t a ls . com
10+ YEARS
Proudly supporting and advising Silvercorp on resource/reserve estimation processes and reporting across its operations. Industry leaders in geology, mining, and geotechnical engineering - AMC Consultants’ due diligence and feasibility studies are relied on by the world’s major investment banks and mining companies. AMC has been Silvercorp’s trusted advisor for Mineral Resource and Mineral Reserve estimation since 2009. With AMC’s continuing guidance, we are now looking forward to yet further streamlining our estimation processes for both internal site operations and external reporting. - RUI FENG, CHAIRMAN AND CEO
MORE ABOUT AMC
amcconsultants.com
“
“
E X E C U T I V E P R O FILE :
Rui Feng
Title: Chairman and CEO
Company: Silvercorp Metals Inc.
Industry: Mining Dr. Rui Feng is a successful entrepreneur, explorer, and mine builder with over 25 years of global mining industry experience. His passion for discovery has led him to explore and acquire mineral opportunities worldwide. He was integral in discovering Jinshan Gold’s CSH Gold Mine in China in 2002, which was acquired by China Gold International. Dr. Feng founded Silvercorp in 2003 by acquiring early-stage properties in China. Through discovery and development, Silvercorp has become one of the most profitable Canadian mining companies, with multiple mines in China. As a director and former CEO of New Pacific Metals, Dr. Feng led the company to Bolivia in 2017 and acquired the Silver Sand project which has recently led to a significant discovery. In addition to delivering value to employees and shareholders through discovery and development, Dr. Feng also believes a sustainable operation requires innovation and more effective management. He pioneered a digital information management tool for Silvercorp’s mines, which has contributed to improved organizational performance and operational profitability. Dr. Feng obtained his B.Sc. and M.Sc. degrees in Geology in China, his Ph.D. in Geological Sciences from the University of Saskatchewan in Canada in 1992, and received a Postdoctoral fellowship from the National Sciences and Engineering Council of Canada in 1992. Dr. Feng supports many community and social causes through contributions made personally and through the actions of the companies he leads.
www.si www.c ol ve mpa rc onyrpme we bsit t a lse.. com
07
SILVERCORP METALS INC
“ Mines are depleting assets but, despite the years of production, recent drilling results brought our inventory at Ying, in terms of reserves, back up to roughly the same level as in 2016, with a renewed 20-year mine life”
“The Ying Mining District was wellknown for having high-grade mineralization at surface,” recalls Silvercorp’s Vice President Lon Shaver. “But, until Dr. Feng assessed its potential, nobody had ever really cracked the code to determine how to address what were effectively nest-like swarms of ore bodies with many narrow, very highgrade veins. Silvercorp brought a new perspective to the project in terms of
08
— Lon Shaver, Vice President, Silvercorp
how to explore and delineate enough material, in substance and size, to begin a profitable, sustainable operation. And that’s what the Ying project was founded upon.”
MAXIMISING OPPORTUNITIES AT YING A joint venture was originally established at Ying in 2003 by Silvercorp making a $5m investment to kickstart operations. The mines across the property have remained selffunded ever since through operations that have delivered profits of $480m to shareholders. A recently-published technical report, completed by AMC Consultants (AMC) in 2020, highlights a bright future for the mining of silver, gold, lead and zinc at the
2003 Year founded
$166m LTM revenue in dollars
1,200+ Number of employees
Ying 2020 Technical Reports – Highlights Effectively replacing reserves since the last report in 2017, the latest technical report (carried out by AMC Consultants) reconfirms a 20-year mine life at Silvercorp’s flagship operation and shows: • 18% Increase in Measured and Indicated Silver Resources. • 4% Increase in Proven and Probable Silver Reserves, on Top of 21 Million Ounces of Silver Produced between June 2016 and December 2019 at the Ying Silver-lead-zinc Mining District. • In comparison with the 2017 Technical Report, Inferred Resource tonnes have increased by 78%, and contained metal
has increased by 42% for silver, 38% for lead, 32% for zinc and 450% for gold. Significant aspects of comparison of Mineral Reserve estimates between June 2016 (previous Technical Report) and December 2019 (Ying 2020 Technical Report): • Increase in total Ying Mineral Reserve silver, lead, and zinc grades of 7%, 2%, and 11% respectively. • Increase in total Ying Mineral Reserve metal content for silver and zinc of 4% and 8% respectively; 1% decrease in total lead content.
www.si l ve rc o rpme t a ls . com
09
SILVERCORP METALS INC
10
Ying property. Shaver notes that in
to be,” explains Shaver. “Our last report
addition to the current inventory of
was based on drilling up to June 2016,
reserves of around 12 million tonnes
and this report brings that forward to
there is also the potential for further
December 2019. Mines are depleting
incre-ases if additional drilling can con-
assets but, despite the production
vert known resources to reserves, as
that took place over that timeframe,
well as identify more resources.
drilling results brought our inventory
“Everything in the report ties back to
at Ying, in terms of reserves, back up
the resources and then the reserves,
to essentially the same level. We had
because it’s upon those reserves that
a 20-year mine life that would have
the mine plan was established, and
been reduced by the depletion that
that dictates the projected economic
took place, but that life has been
contribution of what the mine is going
restored to 20 years again.”
“ The Ying Technical Report has further confirmed our ability to define higher grades and prioritise those grades during the mine life” — Lon Shaver, Vice President, Silvercorp
the source of anomalous gold results from drilling that occurred in the past.” Silvercorp’s recent technical report also introduced the potential for a seventh mining unit and the current Ying operations have excess mill capacity. “Right now, the existing six mines are operating at sustainable production rates,” explains Shaver. “We don’t really want to push them for much higher tonnage, if anything we’re
QUALITY NOT QUANTITY
looking at creating opportunities for
Silvercorp currently operates six mines
higher quality tonnage out of those
across three of its four licences in the
mines, and pursuing the development
Ying mining district - SGX, HZG, HPG,
of a seventh mining area, the DCG
LME, LMW, TLP. The Ying Technical
Project (which would be the first mine
Report confirmed that Ying is prov-
on the fourth licence). When that does
ing to be a prolific producer. “Over the
come online it may contribute to pro-
years, we’ve established the ability to
duction growth and flexibility in terms
define higher grades and prioritise
of the overall operating plan.”
those grades during the mine’s life,”
It’s early days, but Shaver explains
adds Shaver. “This of course brings the
there was work done historically on the
production to a higher level in the
Ying property’s fourth mining licence,
earlier years, which contributes more
which shows the potential of the veins
when calculating our net present value.
that Silvercorp is looking to develop into
Recent drilling appears to have identi-
new production zones. “We’ve been driv-
fied zones of traditional mineralization,
ing a tunnel towards that fourth licence
with high grades and close to existing
and with recent drilling efforts we’ve hit
infrastructure, but also potentially a dif-
some interesting zones,” he confirms. “If
ferent type of mineralization that was
it all proves to be positive, the next steps www.si l ve rc o rpme t a ls . com
11
SILVERCORP METALS INC
12
“ Given the pressures of the pandemic on the global economy, the metals markets should benefit from the fiscal stimulus being put forward. The inflationary pressures we’re seeing will be positive for precious metals” — Lon Shaver, Vice President, Silvercorp
would be to develop additional access and infrastructure to develop another mining operation.”
THE MARKET “Like every other miner in the metals industry, we are in a commodities market where all the producers are price takers,” says Shaver. “The key focus then is how to create and sustain an operation at the low end of the cost curve, so that in good times when prices are high, you make money, but then when prices are low you can survive those tough times, continue to generate positive cash margins and be self-sustaining.” Shaver sees a strong future for precious and base metals: “Given the pressures of the pandemic on the global economy, the metals markets should benefit from the fiscal stimulus being put forward. The inflationary pressures we’re seeing will be positive for precious metals, and silver will benefit from that, along with the part it plays in the electrification of society and its growing use in renewable energy such as solar. At Ying there are many positives as the mining is relatively straightforward, with good ground www.si l ve rc o rpme t a ls . com
13
SILVERCORP METALS INC
“ We trust the expertise AMC Consultants on technical reports and look forward to their input on assessing the viability of our future projects” — Lon Shaver, Vice President, Silvercorp
The Enterprise Blog
14
The Enterprise Blog (EBlog) is Silvercorp’s social media platform for the transparent distribution and flow of work-related knowledge across multiple locations within the business. In the system, each of the mining stopes, development faces, or major pieces of equipment is assigned a blog name. Daily results of onsite inspection by responsible engineers are required to be published on their blogs. The results are listed in a structured data format in a checklist table, containing information and supporting photos. Related parties at different levels of the management team can directly access the daily blog for each workplace, for first-hand information in real time. Meanwhile, the EBlog system also records when a manager has accessed the blog to read or comment on the daily results under their responsibility. With the Enterprise Blog, information collection, assessments are fair and timely, and each team member is responsible for their work distribution, retrieval, and monitoring has become transparent and immediate. The knowledge collected by the frontline technicians or engineers freely flows throughout layers of the management structure. Management have the incentive, and tools, to make prompt and more accurate decisions that can be instantly delivered to responsible parties. The benefits of the system are that team member collaboration becomes easy, KPI assessments are fair and timely, and each team member is responsible for their work.
conditions, and little mitigation needed.
A SUSTAINABLE FUTURE
Metallurgy is strong and our concen-
A holistic and sustainable philosophy
trates are in high demand from smelters
is key to Silvercorp’s growth strategy.
so we are in a good position to be a
From reducing waste to minimising
sustainable producer of silver, gold,
mining’s footprint on the surrounding
lead and zinc.”
environment, the company is proactive in its efforts to lead the conversation
AMC CONSULTANTS
around sustainability for the mining
“AMC have been working with us for a
industry in China. “Across our mine
number of years and understand the
sites we’re continually re-greening
nature of the ore bodies, the informa-
and re-vegetating and right now we’re
tion we’re collecting, how we collect
building an aggregate plant within the
it, how it gets processed and how we
Ying mining district,” explains Shaver.
apply that picture to the operations,”
“Working with the community and local
explains Shaver. “We record some of
government we’re aiming to upcycle
these nuances on our Enterprise Blog;
waste rock stockpiles from our mines
our in-house platform allows us to
into useful building materials.”
store, share and access information
Silvercorp’s involvement with local
in real time across the business.
businesses is creating economic
AMC have made a number of site visits
opportunities in synchronicity with
and combined with the flow of informa-
its mine life plan. Setting the standard
tion we can share they’re in a great
for others to follow in China’s mining
position to chart the process and come
industry bodes well for a productive
up with what we believe are reason-
and bright future for the company.
able conclusions for this latest report. They’ve also worked with us on reports for the GC mine. We trust the expertise AMC brings on technical reports and look forward to their input on assessing the viability of our future projects.” www.si l ve rc o rpme t a ls . com
15
SILVERCORP METALS INC. SUITE 1750-1066 W. HASTINGS STREET VANCOUVER, BC CANADA V6E 3X1 T 1-888-224-1881 E INVESTOR@SILVERCORP.CA
www.silvercorpmetals.com
P0WERED BY