Silvercorp Reports Financial and Operating Results for the First Quarter of Fiscal Year 2014

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug 8, 2013) - Silvercorp Metals Inc. ("Silvercorp" or the "Company") (TSX:SVM)(NYSE:SVM) reported its financial and operating results for the first quarter ended June 30, 2013 ("Q1 Fiscal 2014").

FIRST QUARTER HIGHLIGHTS

• Silver production of 1.4 million ounces and gold production of 3,777 ounces;
• Lead production of 13.5 million pounds and zinc production of 3.7 million pounds;
• Sales of $39.8 million;
• Gross margin of 44% despite significant decline in precious metal prices;
• Net income of $4.6 million or $0.03 per share;
• Strong cash flow from operations of $17.6 million, or $0.10 per share;
• Cash cost of $3.23 per ounce of silver at the Ying Mining District;
• GC Mine continued to undergo trial mining and processing and is progressing towards commercial production; and
• Return of value to our shareholders by the $4.2 million quarterly dividend payment of CAD$0.025 per share.

FINANCIALS

In Q1 Fiscal 2014, net income attributable to equity holders of the Company was $4.6 million or $0.03 per share compared to net income of $6.1 million or $0.04 per share in the three months ended June 30, 2012 ("Q1 Fiscal 2013").

Compared to the same prior year quarter, the decrease in net income was mainly due to (i) significantly lower silver price; net realized silver price was $17.66 per ounce this quarter, which was $5.31 or 23% lower compared to $22.97 per ounce in Q1 Fiscal 2013; (ii) lower base metal prices; net realized lead and zinc prices were 7% and 5% lower in this quarter as compared to the same prior year quarter; and (iii) higher overall production costs as more ore were processed.

In Q1 Fiscal 2014, the Company realized sales of $39.8 million compared to $44.5 million in Q1 Fiscal 2013.

Cost of sales in Q1 Fiscal 2014 was $22.5 million compared to $19.0 million in Q1 Fiscal 2013 and included cash costs of $18.9 million compared to $15.3 million in Q4 Fiscal 2012. The increase of cost of sales was due to more ore being mined and processed.

The gross profit margin in Q1 Fiscal 2014 was 44%, compared to 57% in Q1 Fiscal 2013.

Cash flow from operations in Q1 Fiscal 2014 was $17.6 million or $0.10 per share, compared to $19.3 million, or $0.11 per share, in Q1 Fiscal 2013.

OPERATIONS

In Q1 Fiscal 2014, on a consolidated basis, the Company produced 1.4 million ounces of silver, 3,777 ounces of gold, 13.5 million pounds of lead, and 3.7 million pounds of zinc compared to 1.2 million ounces of silver and 2,653 ounces of gold, 13.7 million pounds of lead, and 3.0 million pounds of zinc in Q1 Fiscal 2013.

1. Ying Mining District, Henan Province, China

In Q1 Fiscal 2014, the Company mined 233,257 tonnes of ore at the Ying Mining District compared to 181,018 tonnes in Q1 Fiscal 2013. Metal production totalled 1.4 million ounces of silver, 1,282 ounces of gold, 13.1 million pounds of lead and 2.9 million pounds of zinc, compared to 1.2 million ounces of silver, 800 ounces of gold, 13.7 million pounds of lead, and 3.0 million pounds of zinc in Q1 Fiscal 2013.

Head grades were 200 grams per tonne ("g/t") for silver, 2.7% for lead and 0.8% for zinc, compared to 227 g/t for silver, 3.6% for lead and 1.1% for zinc in the same quarter last year.

In Q1 Fiscal 2014, total and cash mining costs per tonne were $65.09 and $54.95, respectively, compared to $69.02 and $55.47 in Q1 Fiscal 2013, respectively.

In Q1 Fiscal 2014, a total of 236,173 tonnes of ore was milled compared to 186,455 tonnes in Q1 Fiscal 2013. The cash milling cost per tonne was $12.06 in Q1 Fiscal 2014 compared to $14.17 in Q1 Fiscal 2013.

Total and cash costs per ounce of silver in Q1 Fiscal 2014 for the Ying Mining District were $5.33 and $3.23 respectively, compared to $2.49 and $0.16, in Q1 Fiscal 2013, respectively.

The consolidated operational results for the past five quarters at the Ying Mining District are summarized in the table below:

2. BYP Mine, Hunan Province, China

In Q1 Fiscal 2014, the Company mined 29,075 tonnes of ore at the BYP mine with a gold head grade of 2.8 g/t compared to 27,560 tonnes and a gold head grade of 2.2 g/t in Q1 Fiscal 2013. During the quarter, 2,338 ounces of gold were produced and sold at a cash cost per ounce of gold of $448 compared to 1,724 ounces of gold produced and sold at cash cost per ounce of gold of $577 in the same period last year. In Q1 Fiscal 2014, total and cash mining costs per tonne were $51.17 and $21.04 respectively compared to $47.74 and $20.98 in Q1 Fiscal 2013, respectively.

DEVELOPMENT AND EXPLORATION

1. Ying Mining District, Henan Province, China

As at the end of Q1 Fiscal 2014, the Company completed approximately 2,250 metres ("m") of the 5,200m ramp at the SGX mine and approximately 2,000m of the development work for the 4,800m access ramp at the LM Mine West. During the quarter, the Company also completed approximately 18,000m of horizontal tunnels, raises and declines. In addition, construction for 20,000 square metres of surface facilities, consisting of offices and dormitories within the Ying Mining District, continued.

In Q1 Fiscal 2014, exploration and development expenditures for the Ying Mining District were $9.7 million compared to $9.6 million in Q1 Fiscal 2013.

In light of the significant decline in precious metal prices, the Company is reviewing its short term operating plans to better adapt to the new price environment. As a result, in July 2013, the Company has suspended mining operations at the Portal PD820, PD850 and PD730 within the Ying Mining District as production from these locations was not economical. The impact of the suspension will reduce ore production by 63,000 tonnes for the remainder of the fiscal year, and is expected to reduce approximately 400,000 ounces from expected silver production in the Ying Mining District. Accordingly, the Company has revised its fiscal year 2014 production guidance for the Ying Mining District to 837,000 tonnes of ore, producing 5.5 million ounces of silver, 4,700 ounces of gold and 74.7 million pounds of lead and zinc.

As part of the capital cost savings review, the Company has also identified opportunities to reduce capital expenditures in the current fiscal year at the Ying Ming District. These measures are expected to reduce fiscal year 2014 budgeted capital expenditures by $8 million to $40 million.

2. GC Project, Guangdong Province, China

The Company has substantially completed the construction of GC mine and is progressing well with the preparations for safety and environmental regulatory inspections, prior to commercial production. The majority of the required surface environmental protection facilities together with water and soil conservation engineering work is completed and has undergone test operation. The key component required for passing the safety inspection, in accordance to safety requirements in the Mine Design, is to complete a water sump and pumping station at the -50m elevation. This component is expected to be completed by the end of September 2013, and as such the Company expects to pass the inspection and obtain its Safety Production Permit in the third quarter of fiscal year 2014.

During Q1 Fiscal 2014, approximately 3,100m of tunnels, including 425m of development tunnels, 2,225m of exploration tunnels and 450m of mining preparation tunnels, were completed.

The main access ramp totalling 2,210m in length was completed and has accessed the V2 vein at the +40m, +20m, and 0m elevations. The exploration ramp is completed to a length of 1,800m, representing 39% of the total designed length of 4,600m. To date, the exploration ramp has accessed the V9, V9-1, V9W-1, and V9W-2 veins at the 100m, 50m, 0m and -50 m elevations through cross-cuts and has developed transportation drifts and mining preparation drifts. Once the exploration ramp is completed, access to all known veins within a horizontal distance of 250m is possible. The exploration ramp has also been connected to the main ramp at the 100m and 0m elevations, as well as the main shaft at the +100m, +50m, 0m and -50m elevations to provide ventilation and a safety exit. During the course of fiscal year 2014, the Company will use the main ramp and the exploration ramp access points for mining.

As at the end of Q1 Fiscal 2014, the construction of the 628m main shaft was substantially completed down to its designed depth at elevation -370m. As part of cost savings review for fiscal year 2014, and to coordinate with the planned production schedule, the Company has decided to defer the installation of the hoist system to fiscal year 2015, reducing capital expenditures in the year by $3 million.

In Q1 Fiscal 2014, the Company continued equipment testing and trial processing to fine tune the mill circuit to achieve the desired metallurgical recovery rates for silver, lead, zinc, tin, and sulphur in concentrates. Testing will be on-going for the next several months.

In Q1 Fiscal 2014, $6.2 million (Q1 Fiscal 2013 - $3.1 million) of exploration and development expenditures were incurred at the GC mine. From the capital cost review for fiscal year 2014, the Company has reduced the budgeted capital expenditures by approximately $8 million to $21 million at the GC mine.

3. BYP Mine, Hunan Province, China

In Q1 Fiscal 2014, the Company completed the installation of shaft equipment for the newly completed 265m shaft. The construction of the head frame is expected to commence in the next quarter. Once completed, this shaft will facilitate mining of the #3 gold mineralization body and the #5 zinc and lead ore body. In addition, the construction of a 1,500 t/d tailings-backfill facility has been substantially completed with expected trial runs to commence in the next quarter.

In Q1 Fiscal 2014, exploration and development expenditures at the BYP mine were $1.6 million compared to $1.3 million in Q1 Fiscal 2013.

4. X Mines, Henan Province, China

The X Mines consist of two mining projects: the XBG project and XHP project.

In Q1 Fiscal 2014, the Company entered into a share transfer agreement ("the Agreement") with an arm's length private Chinese company. Pursuant to the Agreement, the Company's subsidiary, Henan Found Mining Co. Ltd., will sell its 90% equity interest in Zhongxing Mining Co. Ltd. (XBG project) for $13.8 million (RMB 84 million). As of the date of this news release, an initial deposit of $4.9 million (RMB 30 million) has been received. The transaction is expected to be completed within 12 months.

As at the end of this quarter, the Company has also suspended activities at the XHP project as part of its cost saving measures.

Myles Gao, P.Geo., President, is the Qualified Person for Silvercorp under NI 43-101 and has reviewed and given consent to the technical information contained in this News Release.

This earnings release should be read in conjunction with the Company's Management Discussion & Analysis, Financial Statements and Notes to Financial Statements for the corresponding period, which have been posted on SEDAR at www.sedar.com and are also available on the Company's website at www.silvercorp.ca. All figures are in United States dollars unless otherwise stated.

About Silvercorp

Silvercorp is a low-cost silver-producing Canadian mining company with multiple mines in China which has paid a cash dividend since 2007. The Company is currently developing the GC project in southern China which it expects will become its next operating mine in 2013. The Company's vision is to deliver shareholder value by focusing on the acquisition of under developed projects with resource potential and the ability to grow organically. For more information, please visit our website at www.silvercorp.ca.

CAUTIONARY DISCLAIMER - FORWARD LOOKING STATEMENTS

Certain of the statements and information in this press release constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian provincial securities laws. Any statements or information that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "is expected", "anticipates", "believes", "plans", "projects", "estimates", "assumes", "intends", "strategies", "targets", "goals", "forecasts", "objectives", "budgets", "schedules", "potential" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements or information. Forward-looking statements or information relate to, among other things: the price of silver and other metals; the accuracy of mineral resource and mineral reserve estimates at the Company's material properties; the sufficiency of the Company's capital to finance the Company's operations; estimates of the Company's revenues and capital expenditures; estimated production from the Company's mines in the Ying Mining District; timing of receipt of permits and regulatory approvals; availability of funds from production to finance the Company's operations; and access to and availability of funding for future construction, use of proceeds from any financing and development of the Company's properties.

Forward-looking statements or information are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking statements or information, including, without limitation, risks relating to: fluctuating commodity prices; calculation of resources, reserves and mineralization and precious and base metal recovery; interpretations and assumptions of mineral resource and mineral reserve estimates; exploration and development programs; feasibility and engineering reports; permits and licences; title to properties; First Nations title claims and rights; property interests; joint venture partners; acquisition of commercially mineable mineral rights; financing; recent market events and conditions; economic factors affecting the Company; timing, estimated amount, capital and operating expenditures and economic returns of future production; integration of future acquisitions into the Company's existing operations; competition; operations and political conditions; regulatory environment in China and Canada; environmental risks; foreign exchange rate fluctuations; insurance; risks and hazards of mining operations; key personnel; conflicts of interest; dependence on management; internal control over financial reporting as per the requirements of the Sarbanes-Oxley Act; and bringing actions and enforcing judgments under U.S. securities laws.

This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements or information. Forward-looking statements or information are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements or information due to a variety of risks, uncertainties and other factors, including, without limitation, those referred to in the Company's Annual Information Form for the year ended March 31, 2013 under the heading "Risk Factors". Although the Company 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, described or intended. Accordingly, readers should not place undue reliance on forward-looking statements or information.

The Company's forward-looking statements and information are based on the assumptions, beliefs, expectations and opinions of management as of the date of this press release, and other than as required by applicable securities laws, the Company does not assume any obligation to update forward-looking statements and information if circumstances or management's assumptions, beliefs, expectations or opinions should change, or changes in any other events affecting such statements or information. For the reasons set forth above, investors should not place undue reliance on forward-looking statements and information.

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