IMPROVED dilution control led to increased June quarter production at Silvercorp Metals’ Ying Mining District operations in Henan Province. These measures resulted in a 10% increase in silver head grade to 250 grams/tonne and an 8% increase in lead head grade to 3.6%.

An overview of Silvercorp’s new GC mine in Guangdong Province of southern China where commercial production has begun.

An overview of Silvercorp’s new GC mine in Guangdong Province of southern China where commercial production has begun.

Total ore mined at Ying district during the quarter was 167,107 tonnes compared to 173,485 tonnes in the corresponding quarter of 2014. Silvercorp sold 1.2 million ounces of silver from Ying in the quarter as well as 900 ounces of gold, 12.5 million pounds of lead and 1.5 million pounds of zinc, compared to 1.1 million silver ounces, 800 gold ounces, 11.5 million pounds of lead and 1.2 million pounds of zinc in the same period last year.

In February 2015, Silvercorp terminated one mining contractor upon expiration of its contract and entered into contracts with three new contractors to replace the terminated contractor who previously worked out of three portals at SGX mine. Regrettably, the changeover process was slow as the company and the contractor being terminated had protracted disagreements and negotiations regarding the final payment.

In June the company reached an agreement with the contractor resulting in the contractor departing from all three portals, which have now returned to normal operations. The disruptions have impacted not only the production but also resulted in additional costs incurred at SGX.

Total and cash mining costs per tonne were US$75 and $56.65, respectively, compared to $58.35 and $46.96, respectively, in the same period of 2015. As well as the changeover which added about $6 per tonne, the increased costs were also due to an approximate 20% increase in mining preparation expenditures as more in-stope diamond drilling and preparation tunnelling were used to achieve better grade and dilution control.

During the quarter, Silvercorp completed approximately 24,575 metres of horizontal tunnels, raises and declines and 16,366 metres of in-stope diamond drilling.

Commencement of commercial production at GC mine in Guangdong Province also contributed to overall higher metal production and sales for Silvercorp. Total ore mined in the June quarter was 66,727 tonnes at a total mining cost and cash mining cost of $56.83 and $48.74, compared to 48,396 tonnes mined in the pre-commercial period in June 2014 quarter at a total mining cost and cash mining cost of $64.62 and $42.23.

Head grades were 93 grams/tonne for silver, 1.7% for lead and 2.5% for zinc in the quarter compared to 110 grams/tonne, 1.4% and 2.5% respectively in 2014.

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