Silvercorp Reports Net Income of $7.5 Million ($0.05 EPS) on Record Silver Sales in First Quarter

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 13, 2009) - Silvercorp Metals Inc. ("Silvercorp" or the "Company") (TSX:SVM)(NYSE Amex:SVM) reports its unaudited financial and operating results for the first quarter ended June 30, 2009. The financial results are expressed in US dollars (US$) unless stated otherwise.

FIRST QUARTER HIGHLIGHTS

- Net earnings of $7.5 million or $0.05 per share, compared to $1.2 million or $0.01 per share last quarter and $11.6 million or $0.08 per share in the same quarter last year;

- Produced a record 1.2 million ounces of silver and 16.0 million pounds of lead, representing 6% and 11% increases, compared to 1.1 million ounces of silver and 14.4 million pounds of lead produced, respectively, in the same quarter last year;

- The total production cost was negative $4.29 per ounce of silver and the cash cost was negative $5.09 per ounce of silver, making Silvercorp an industry leading low-cost producer;

- Generated $10.4 million cash from operating activities or $0.06 per share;

- Total cash, cash equivalents and short term investments increased by $10.3 million to $75.7 million;

- Silver head grade at the Ying Mine was 488 g/t, up 23% compared to the same quarter last year; and

- Completed a NI 43-101 mineral resource update from the GC project in Guangdong Province, China, increasing Measured and Indicated mineral resources by 250% to 28.5 million ounces of silver.

FINANCIALS

Silvercorp produced 6% more silver and 11% more lead in this quarter, compared to the same quarter last year. Sales revenue for this quarter was $22.6 million compared to $30.9 million in the same quarter last year. This 26.8% reduction was the result of substantially lower net smelter return (NSR) prices (quoted market metal prices less smelter charges and value added tax) for silver and base metals. Cost of sales for this quarter was $5.9 million, representing a 37.9% reduction compared to the same quarter last year despite the increase in the quantities of silver and lead produced. The cost reduction is a reflection of improved operations and cost controls. Even with lower NSR prices, gross profit margin this quarter improved to 74% from 69% in the same quarter last year. The consolidated net income for the first quarter was $7.5 million or $0.05 per share, representing a decrease of 35.4% compared to $11.6 million or $0.08 per share in the same quarter last year.

Cash and cash equivalents plus short-term investments increased by $10.3 million to $75.7 million (March 31, 2009 - $65.4 million). The 15.7% increase is mainly due to $10.4 million cash generated by operating activities and a $2.9 million line of credit drawn, offset by $3.0 million of capital expenditures and $2.8 million of cash dividend payments.

OPERATIONS

Silvercorp mined 103,923 tonnes of ore during the first quarter, 32,021 tonnes less than the same quarter last year, as operations at the TLP, LM and HPG mines were only partially resumed following the suspension of operations at the end of 2008.

During the quarter, mining production was primarily from the Ying Mine. Ores mined from the Ying Mine were 86,248 tonnes, 7% higher than the same quarter last year, with silver head grades improving to 488 g/t from 396 g/t in the prior year period. Cash cost per ounce of silver for the first quarter was negative $5.00, compared with negative $7.42 per ounce of silver in the same quarter last year, but an improvement from the prior quarter of negative $3.62 per ounce. The improvement in cash cost per ounce of silver was mainly driven by higher realized by-products prices.

The operating results for the past five quarters at the Ying Mine are summarized as follows:

/T/

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Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009
30-Jun-09 31-Mar-09 31-Dec-08 30-Sep-08 30-Jun-08
---------------------------------------------------------------------------
Ores Mined (tonne)
Direct Smelting
Ores (tonne) 3,773 2,610 3,114 2,387 3,071
Ores to be
milled (tonne) 82,475 55,232 77,968 71,456 77,567
-----------------------------------------------------
86,248 57,842 81,082 73,843 80,638
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Run of Mine
Ores (tonne)
Direct Smelting
Ores (tonne) 3,773 2,726 3,114 2,387 3,071
Ores Milled (tonne) 77,330 60,167 70,854 69,493 74,691
-----------------------------------------------------
81,103 62,893 73,968 71,880 77,762
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Head Grades of Run
of Mine Ores
Silver (gram/tonne) 488.1 486.7 420.2 331.2 396.0
Lead (%) 9.1 9.1 7.7 6.0 6.7
Zinc (%) 3.1 3.1 2.6 2.5 3.3
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Recovery Rate of the
Run of Mine Ores
Silver (%) 93.3 93.1 92.9 91.3 90.7
Lead (%) 96.5 97.2 96.7 95.6 95.9
Zinc (%) 76.3 69.4 78.1 68.2 72.0
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Cash Mining cost
($ per tonne) 42.27 45.44 45.10 55.71 55.61
Total Mining cost
($ per tonne) 52.70 58.71 61.60 72.86 69.44
Cash Milling cost
($ per tonne) 10.84 10.57 10.32 11.24 10.80
Total Milling cost
($ per tonne) 11.74 11.76 11.24 12.24 11.75
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Production Cost per
Ounce of Silver,
adjusted for
by-product credits (4.19) (3.24) 0.18 (3.44) (7.28)
Cash Cost per Ounce
of Silver, adjusted
for by-product
credits (5.00) (3.62) (1.39) (5.14) (7.42)
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/T/

NSR PRICES

The NSR prices for the past five quarters are as follows:

/T/

---------------------------------------------------------------------------
For the quarter ended
June 30, March 31, December 31, September 30, June 30,
2009 2009 2008 2008 2008
---------------------------------------------------------------------------
Silver (US$/oz) 9.89 8.68 7.34 11.99 13.93
Gold (US$/oz) 573 648 449 621 661
Lead (US$/lb) 0.56 0.52 0.41 0.81 0.89
Zinc (US$/lb) 0.46 0.37 0.28 0.41 0.55
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/T/

In the quarter, the NSR prices for silver, lead and zinc all increased as a result of improved quoted metal prices and reduced smelter chargers. In particular, the NSR prices of silver and lead improved to 85% of quoted metal prices (net of value added tax) from 80% in the previous quarter.

OUTLOOK

The Company's production outlook for fiscal 2010 is 410,000 tonnes, of which 260,000 tonnes will be mined from the Ying mine; 100,000 tonnes from TLP; 30,000 tonnes from HPG; and 20,000 tonnes from LM. Silver production is expected to be around 4.65 to 5.05 million ounces in fiscal 2010. Capital expenditures are budgeted at $16 million for the Ying camp, of which $11 million are for exploration drilling at the Ying mine and $5 million are for exploration drilling and mine development at the TLP, LM and HPG mines.

At the Ying camp, the Company is carrying out a regional IP geophysical program, aiming to define drill targets outside the current mining areas.

At the GC project in Guangdong Province, China, the Company has made the following progress in applying for a mining permit and advancing the project towards production:

- An Environmental Assessment Report was completed in March 2009 and has passed a review by an expert panel appointed by the Environmental Protection Bureau of Guangdong Province and by the local community. The panel has recommended that the Environmental Protection Bureau approve the GC project mining development. Pending receipt of the final approval from the Environmental Protection Bureau, a mining permit application can be submitted to the Ministry of Land and Resources of China in Beijing.

- In June 2009, the Company completed a NI 43-101 technical report update for the GC Ag-Pb-Zn project. Using a 150 g/t silver equivalent cutoff grade, the GC deposit contains 28.5 million ounces of silver, 96,000 tonnes of lead, and 214,000 tonnes of zinc in the Measured and Indicated categories and 30.8 million ounces of silver, 115,000 tonnes of lead and 213,000 tonnes of zinc in the Inferred category.

- The Company has engaged a Chinese engineering firm with Class A qualifications in mine and mill designs to provide a full mine and mill design for the GC project. This will be equivalent to a feasibility study in Canada.

- The Company has budgeted approximately $4 million for the GC project in fiscal 2010 for exploration reports, mine and mill designs, and for permitting. This brings the Company's overall capital expenditures budget for fiscal 2010 to $20 million.

Silvercorp continues to pursue future growth opportunities by carrying out an aggressive exploration program within the existing exploration and mining permit areas as well as acquiring projects in China and other jurisdictions.

CONFERENCE CALL AND WEBCAST INFORMATION

A conference call and live audio webcast to discuss these results have been scheduled as follows:

Date: Friday, August 14, 2009

Time: 7:00 am PT (10:00 am ET)

Dial-In Number: 1-612-332-0530

Live audio webcast: www.silvercorp.ca (click on the link on the home page)

Playback webcast can be accessed at: www.silvercorp.ca

About Silvercorp Metals Inc.

Silvercorp Metals Inc., China's largest primary silver producer, is engaged in the acquisition, exploration and development of silver related mineral properties located in the People's Republic of China ("China"). Silvercorp Metals Inc. is operating and developing four Silver-Lead-Zinc mines at the highly profitable Ying Mining Camp, Henan Province, China. Silvercorp is also applying for a mining permit at its 95% owned, GC&SMT property to profitably mine and produce silver, lead and zinc in Guangdong Province, China. The Company's common shares are included as a component of the S&P/TSX Composite and the S&P/TSX Global Mining Indexes.

CAUTIONARY DISCLAIMER -- FORWARD LOOKING STATEMENTS

Statements in this press release other than purely historical factual information, including statements relating to mineral resources and reserves, or the Company's future plans and objectives, or expected production levels, exploration, head grades, recovery rates, cash flows, acquisitions, and capital expenditures constitute forward-looking statements. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in the Company's business, including risks inherent in mineral exploration, development, and mining. Production projections are based not on mineral reserves but on mineral resources which do not have demonstrated economic viability. There can be no assurance that such forward-looking statements, including those in the outlook section, 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 such statements. Except in accordance with applicable securities laws, the Company expressly disclaims any obligation to update any forward-looking statements or forward-looking statements that are incorporated by reference herein.

/T/

SILVERCORP METALS INC.
Unaudited Consolidated Balance Sheets
--------------------------------------------------------------------------

(Expressed in thousands of U.S. dollars, except for share and per share
figures)

June 30, March 31,
2009 2009
--------------------------------------------------------------------------
ASSETS

Current Assets
Cash and cash equivalents $ 53,744 $ 41,470
Short term investments 21,933 23,962
Restricted cash - 732
Accounts receivable, prepaids and deposits 2,285 2,933
Inventories 2,550 1,529
Current portion of future income tax assets - 143
Amounts due from related parties 246 249
--------------------------------------------------------------------------
80,758 71,018

Long term prepaids 1,390 1,058
Long term investments 12,562 12,186
Restricted cash 298 293
Property, plant and equipment 29,224 29,072
Mineral rights and properties 96,554 89,413
Future income tax assets 2,485 2,162
--------------------------------------------------------------------------
$ 223,271 $ 205,202
--------------------------------------------------------------------------
--------------------------------------------------------------------------

LIABILITIES

Current Liabilities
Accounts payable and accrued liabilities $ 9,122 $ 8,533
Deposits received 2,577 1,290
Bank loan and notes payable 2,928 658
Dividends payable 2,780 2,564
Income tax payable 642 3,041
Amounts due to related parties 7,336 7,353
--------------------------------------------------------------------------
25,385 23,439

Future income tax liabilities 19,681 19,678
Asset retirement obligations 2,061 2,029
--------------------------------------------------------------------------
47,127 45,146

Non-controlling interests 10,628 7,610

SHAREHOLDERS' EQUITY

Share capital 135,604 135,604
Contributed surplus 4,155 3,764
Reserves 31,893 31,893
Accumulated other comprehensive loss (2,205) (10,167)
Deficit (3,931) (8,648)
--------------------------------------------------------------------------
165,516 152,446
--------------------------------------------------------------------------

$ 223,271 $ 205,202
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Approved on behalf of the Board:

(Signed) Robert Gayton
---------------------------------------------
Director

(Signed) Rui Feng
---------------------------------------------
Director

SILVERCORP METALS INC.
Unaudited Consolidated Statement of Operations
--------------------------------------------------------------------------

(Expressed in thousands of U.S. dollars, except for share and per share
figures)

Three months ended June 30,
------------------------------
2009 2008
--------------------------------------------------------------------------

Sales $ 22,571 $ 30,859
--------------------------------------------------------------------------

Cost of sales 4,972 7,939
Amortization and depletion 929 1,568
--------------------------------------------------------------------------
5,901 9,507
--------------------------------------------------------------------------

Gross profit 16,670 21,352
--------------------------------------------------------------------------

Expenses
Accretion of asset retirement obligations 30 19
Amortization 202 293
Foreign exchange loss (gain) (1,516) 120
General exploration and property
investigation expenses 2,307 479
Impairment charges and bad debt 777 -
Investor relations 71 95
General and administrative 2,725 2,948
Professional fees 575 290
--------------------------------------------------------------------------
5,171 4,244
--------------------------------------------------------------------------
11,499 17,108

Other income and expenses
Equity loss in investment (82) (205)
Loss on disposal of property, plant and
equipment (256) (9)
Interest income 238 777
Other income 160 29
--------------------------------------------------------------------------
60 592

Income before income taxes and
non-controlling interests 11,559 17,700

Income tax expense (recovery)
Current 1,578 2,040
Future (186) (153)
--------------------------------------------------------------------------
1,392 1,887

Income before non-controlling interests 10,167 15,813

Non-controlling interests (2,680) (4,212)
--------------------------------------------------------------------------

Net income $ 7,487 $ 11,601
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Basic earnings per share $ 0.05 $ 0.08
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Diluted earnings per share $ 0.05 $ 0.08
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Weighted Average Number of Shares
Outstanding - Basic 161,587,001 151,655,320
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Weighted Average Number of Shares
Outstanding - Diluted 162,915,490 153,178,476
--------------------------------------------------------------------------
--------------------------------------------------------------------------

SILVERCORP METALS INC.
Unaudited Consolidated Statements of Comprehensive Income
--------------------------------------------------------------------------

(Expressed in thousands of U.S. dollars)

Three months ended June 30,
------------------------------
2009 2008
--------------------------------------------------------------------------

Net income $ 7,487 $ 11,601
Other comprehensive income (loss),
net of taxes:
Unrealized loss on available for
sale securities - (69)
Reclassification adjustments of unrealized
loss due to impairment of
available-for-sale securities 195 -
Unrealized exchange gain (loss) on
translation of self-sustaining foreign
operations (7,151) 1,826
Unrealized exchange gain on translation of
functional currency to reporting currency 14,918 1,658
--------------------------------------------------------------------------
Other comprehensive income 7,962 3,415
--------------------------------------------------------------------------
Comprehensive income $ 15,449 $ 15,016
--------------------------------------------------------------------------
--------------------------------------------------------------------------

SILVERCORP METALS INC.
Unaudited Consolidated Statements of Cash Flows
--------------------------------------------------------------------------

(Expressed in thousands of U.S. dollars)

Three months ended June 30,
------------------------------
2009 2008
--------------------------------------------------------------------------
Cash provided by (used for)

Operating activities
Net income for the period $ 7,487 $ 11,601
Add (deduct) items not affecting cash:
Accretion of asset retirement obligations 30 19
Amortization 1,131 1,568
Equity investment loss 82 205
Future income tax recovery (186) (153)
Impairment charges and bad debt 777 -
Loss on disposal of property, plant,
and equipment 256 10
Non-controlling interests 2,680 4,211
Stock-based compensation 391 567
Unrealized foreign exchange gain (1,516) -
--------------------------------------------------------------------------
11,132 18,028

Net change in non-cash working capital
Accounts receivable and prepaids 139 (5,656)
Inventory (950) (2,025)
Restricted cash 726 -
Accounts payable and accrued liabilities 387 15,324
Income tax payable (2,335) (359)
Deposits received 1,286 (241)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Cash provided by operating activities 10,385 25,071
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Investing activities
Acquisition of mineral rights and
properties (2,173) (31,477)
Acquisition of property, plant, and
equipment (389) (3,830)
Decrease in short term investments 4,053 5,063
Decrease (increase) in long term prepaids (420) 2,957
Proceeds from disposal of property, plant,
and equipment - 157
--------------------------------------------------------------------------
Cash provided by (used in) investing
activities 1,071 (27,130)
--------------------------------------------------------------------------

Financing activities
Repayment from (advance to) related
parties (21) 108
Bank loans 2,928 -
Repayment of bankers acceptance (658) -
Cash dividends distributed (2,770) -
Share subscriptions for cash, net of
commission and expenses - 21
Shares returned to treasury for
cancellation - (4,655)
--------------------------------------------------------------------------
Cash used in financing activities (521) (4,526)
--------------------------------------------------------------------------

Effect of exchange rate changes on cash and
cash equivalents 1,339 2,084

Increase (decrease) in cash and cash
equivalents 12,274 (4,501)

Cash and cash equivalents, beginning of
period 41,470 47,093
--------------------------------------------------------------------------

Cash and cash equivalents, end of period $ 53,744 $ 42,592
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Supplemental information:
Interest paid $ 2 $ -
Income tax paid $ 3,977 $ 2,040

Non-cash investing activities:
Common shares issued for mineral rights
and properties $ - $ 36,484

SILVERCORP METALS INC.
Unaudited Consolidated Statements of Shareholders' Equity

(Expressed in thousands of U.S. dollars, except for numbers of shares
figures)

---------------------------------------------------------------------------
Share capital
----------------------
Number of Contributed
shares Amount surplus Reserves
---------------------------------------------------------------------------
Balance, March 31, 2008 149,416,476 $ 78,334 $ 1,722 $ 2,078
Options exercised 4,482 22 - -
Shares issued for property 4,532,543 36,485 - -
Financing 10,000,000 24,205
Net of shares
issuance costs (1,570) - -
Cancellation of shares
under normal course
issuer bid (2,366,500) (1,885) (47) -
Value of options
transferred upon
exercised - 13 (13) -
Stock based compensation - - 2,102 -
Unrealized loss on
available for sale
securities - - - -
Appropriation to reserves - - - 29,815
Cash dividends declared
and distributed - - - -
Loss of the year - - - -
Unrealized gain on
translation of
self-sustaining operation - - -
Unrealized loss on
translation of
functional currency to
reporting currency - - - -
---------------------------------------------------------------------------
Balance, March 31, 2009 161,587,001 135,604 3,764 31,893
Stock based compensation - - 391 -
Reclassification
adjustments of
unrealized loss due to
impairment of available-
for-sale securities
(net of tax) - - - -
Cash dividends declared
and distributed - - - -
Earnings of the period - - - -
Unrealized loss on
translation of
self-sustaining operation - - - -
Unrealized gain on
translation of functional
currency to reporting
currency - - - -
---------------------------------------------------------------------------
Balance, June 30, 2009 161,587,001 $ 135,604 $ 4,155 $ 31,893
---------------------------------------------------------------------------
---------------------------------------------------------------------------

---------------------------------------------------------------------------
Accumulated Total
other Retained share-
comprehensive earnings holders'
income (loss) (deficit) equity
---------------------------------------------------------------------------
Balance, March 31, 2008 14,122 $ 52,736 $ 148,992
Options exercised - - 22
Shares issued for property - - 36,485
Financing 24,205
Net of shares
issuance costs - - (1,570)
Cancellation of shares
under normal course
issuer bid - (7,542) (9,474)
Value of options
transferred upon
exercised - - -
Stock based compensation - - 2,102
Unrealized loss on
available for sale
securities (155) - (155)
Appropriation to reserves - (29,815) -
Cash dividends declared
and distributed - (8,030) (8,030)
Loss of the year - (15,997) (15,997)
Unrealized gain on
translation of
self-sustaining operation 11,270 - 11,270
Unrealized loss on
translation of
functional currency to
reporting currency (35,404) - (35,404)
---------------------------------------------------------------------------
Balance, March 31, 2009 (10,167) (8,648) 152,446
Stock based compensation - - 391
Reclassification
adjustments of
unrealized loss due to
impairment of available-
for-sale securities
(net of tax) 195 - 195
Cash dividends declared
and distributed - (2,770) (2,770)
Earnings of the period - 7,487 7,487
Unrealized loss on
translation of
self-sustaining operation (7,151) - (7,15