TECHNICAL REPORT for SONGXIAN PROPERTY, HENAN PROVINCE, CHINA For
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AMC Mining Consultants (Canada) Ltd. BC0767129 Suite 1330, 200 Granville Street Vancouver BC V6C 1S4 CANADA T +1 604 669 0044 F +1 604 669 1120 E [email protected] TECHNICAL REPORT FOR SONGXIAN PROPERTY, HENAN PROVINCE, CHINA for SILVERCORP METALS INC. Prepared by AMC Mining Consultants (Canada) Ltd In accordance with the requirements of National Instrument 43- 101, “Standards of Disclosure for Mineral Projects”, of the Canada Securities Administrators Report prepared by: P R Stephenson, P.Geo. H A Smith, P.Eng. A Riles, MAIG M Molavi, P.Eng. AMC: 712020 Effective Date 30 June 2012 ADELAIDE BRISBANE MELBOURNE PERTH TORONTO VANCOUVER MAIDENHEAD +61 8 8201 1800 +61 7 3839 0099 +61 3 8601 3300 +61 8 6330 1100 +1 416 640 1212 +1 604 669 0044 +44 1628 778 256 www.amcconsultants.com SILVERCORP METALS INC Technical Report Songxian Property 1 SUMMARY Introduction AMC Mining Consultants (Canada) Ltd (AMC) was commissioned by Silvercorp Metals Inc. (Silvercorp) to prepare a Technical Report on the Songxian Property (Property) (also known as “X Mines”), in Henan Province, China, which Silvercorp acquired in late 2011. There has been no previous Technical Report on the Property. The Property comprises the XBG and XHP silver-gold-lead-zinc (Ag-Au-Pb-Zn) mines and associated exploration properties, in two project areas. In August 2011, Silvercorp acquired a 90% interest in the XBG project, and in November 2011, it acquired a 100% interest in the XHP project. Both acquisitions were made through Silvercorp’s 77.5% owned subsidiary, Henan Found. The Property is situated in the east extension of the Qinling Mountain Belt, near the margin of the Northern China Craton and in the same regional mineralization belt as Silvercorp’s Ying Property. This belt is one of the largest silver-gold and base metal belts and largest silver producing regions in China. Location and History The Property is located about 220 km southwest of Zhengzhou (pop. 7.0 million), the capital city of Henan Province, and 100 km southwest of Luoyang (pop. 1.4 million) the nearest major city. Zhengzhou is the region's largest industrial city, offering full service facilities and daily air flights to Beijing and other major population centres such as Shanghai and Hong Kong. The nearest small city is the Songxian county town (pop. 65,000+), about 60 km by paved roads to the northeast of the Property. The XBG project has a mining license covering 26.4 square kilometers (km2) expiring in November 2022 and the adjacent NTM gold exploration license covering 2.5 km2. The main assets include a 350 tonne per day (tpd) flotation mill, a tailings management facility (TMF) built in 2010 within the mining license area, and an environment permit to construct a 1,000 tpd flotation mill. The XHP project has a 14.1 km2 mining license, the HGDG gold exploration license of 4.5 km2 and a 400 tpd flotation mill. The XHP project is located 6 km northwest of the XBG project. As one of the major metallogenic belts for precious and base metal resources in West Henan, the Property and its adjacent areas have been the subject of a number of government-funded research and exploration programs since the mid-1950s. AMC 712020 : 30 October 2012 i SILVERCORP METALS INC Technical Report Songxian Property History of XBG Project The XBG area has been mined by artisanal miners for gold and silver since the late 1980s. Early exploration activities were restricted to regional scale surface mapping, stream sediment geochemical sampling, and limited surface trenching. In the middle and late 1980s and 1990s, a number of state-owned geological exploration teams carried out exploration programs for gold and polymetallic mineralization in the project area. The exploration was restricted to surface exploration. Between 2003 and 2008, the previous owner, Zhongxing Mining Ltd. (Zhongxing), conducted surface trenching and tunnelling that tested the known mineralized structures. This led to a reported combined lead and zinc resource (estimated according to Chinese standards, non NI 43-101 compliant) of 0.463m tonnes averaging 3.1% Pb and 3.4% Zn. This resource is officially approved by the Henan Provincial Review Centre of Mineral Resources and Mineral Reserves, a Henan Provincial government agency. AMC has not done sufficient work to classify the historical estimates reported above as current Mineral Resources or Mineral Reserves, and these historical estimates are not being treated as current Mineral Resources or Mineral Reserves as defined in Sections 1.2 and 1.3 of NI 43-101. The historical estimates should not be relied upon. After being issued with the mining license in November 2010, Zhongxing carried out underground exploration and development tunnelling. By the end of July 2011, a total of 4,500 m of tunnels and several shallow shafts had been developed in the mine area. According to Zhongxing’s records, over 20,000 t of silver-lead-zinc mineralized material were recovered from underground tunnels and about 12,000 t of mineralized material were treated in the 350 tpd flotation mill at the mine camp. Metal recoveries from the test milling were reported to be over 90% for silver and lead and 80% for gold and zinc. History of XHP Project From 1956 to 1958, the Regional Geological Survey Team of the Northwest Bureau of Geological Ministry completed a 1:200,000 scale regional reconnaissance and investigated the geological background of mineralization in the project area. This was followed up by a 1:50,000 magnetic survey in 1961. Between 1982 and 1993, the No.1 Geo-exploration Team of the Henan Provincial Geological Exploration Bureau carried out several surface geochemical sampling programs and delineated a number of gold showings, including the Dianfang gold deposit, which is directly adjacent to the project area. Gold mineralization at Dianfang is classified as explosive breccia-hosted. The Dianfang mine is still in operation, and is discussed under Adjacent Properties, in Section 23. Between 2001 and 2007, the No.5 Nonferrous Geo-exploration Team of the Henan Provincial Geological Exploration Bureau carried out an extensive exploration program in AMC 712020 : 30 October 2012 ii SILVERCORP METALS INC Technical Report Songxian Property the project area and delineated 15 gold mineralized zones, four lead-zinc mineralized zones and one fluorite zone. Resource estimation for gold, lead and zinc was conducted according to Chinese official standards. Reported resources include a gold resource of 820,000 tonnes at 4.71 g/t Au, a lead resource of 510,300 tonnes at 4.77% Pb, and a fluorite resource of 1,529,800 tonnes at 49.22% CaF2 (non NI 43-101 compliant). The Songxian Gold Company (SX Gold) of Luokuang Group acquired the XHP project in 2008, and focused on mining the oxidized gold zone near surface. The oxidized mineralization was treated in the 500 tpd carbon-in-leach (CIL) circuit to recover gold only. In 2011, a flotation circuit was installed to recover lead-silver concentrate from the partially oxidized gold mineralization after gold is recovered through the CIL circuit. Mill recoveries were reported as 75% for gold, 70% for silver and 60% for lead. AMC has not done sufficient work to classify the historical estimates reported above as current Mineral Resources or Mineral Reserves, and these historical estimates are not being treated as current Mineral Resources or Mineral Reserves as defined in Sections 1.2 and 1.3 of NI 43-101. The historical estimates should not be relied upon. Geology and Mineralization The Property is situated in the 300 km-long west-northwest trending Qinling orogenic belt, a major structural belt formed by the collision of two large continental tectonic plates in Paleozoic time. The Qinling orogenic belt is comprised largely of Proterozoic- to Paleozoic-age rock sequences consisting of mafic to felsic volcanic rocks with variable amounts of interbedded clastic and carbonate sedimentary rocks. The rocks are weakly metamorphosed to lower greenschist facies, with local areas of strongly metamorphosed, lower amphibolite facies. The metamorphosed sequence is intruded by mafic to felsic dikes and stocks of Proterozoic and Mesozoic ages. They are overlain by non-metamorphosed sedimentary rock sequences of Mesozoic- to Cenozoic-age, primarily marls and carbonaceous argillites, which are in turn overlain locally by sandstone-conglomerate sequences. The dominant structures in the Qinling orogenic belt are west-northwest trending folds and faults generated during the collision of the two major tectonic plates in Paleozoic time. The faults have associated conjugate shear zones, which display features of brittle fracturing such as fault gouge, brecciation and well-defined slickensides. These are associated with all the important mineralization recognized along the orogenic belt. The XBG and XHP project areas are underlain by Middle Proterozoic andesite flows intercalated with minor thinly-bedded rhyolite. The Proterozoic volcanic sequence was intruded by Mesozoic granitic stocks. Mesothermal-style silver-gold-lead-zinc mineralization is controlled by NNE-, NEE-, and NW-trending faults developed within the regional Machaoying deep fault zone and distributed along the northeast margin of a large granitic batholith with an elongated extension of more than 40 km. AMC 712020 : 30 October 2012 iii SILVERCORP METALS INC Technical Report Songxian Property In the XHP area, about 20 mineralized veins have been identified by mapping, trenching, underground channel sampling and surface diamond drilling. Known mineralized structures in the XHP area have been categorized into four types. These are: 1. Explosive breccia-hosted, gold-dominant, polymetallic veins 2. Gold-silver-dominant polymetallic veins 3. Polymetallic sulphide veins 4. Fluorite Vein Mineralization in the XBG project area is closely associated with fault zones. The fault zones are widely developed in Proterozoic intermediate and acidic volcanics.