Mr. Lon Shaver reports
SILVERCORP SUBSIDIARY ACQUIRES THE LA YESCA SILVER PROJECT, NAYARIT STATE, MEXICO
Silvercorp Metals Inc.'s subsidiary, New Infini Silver Inc., has acquired a 100-per-cent interest in the La Yesca silver project, a silver-polymetallic, epithermal-type project located in Nayarit, Mexico, approximately 100 kilometres (185 km by road) northwest from Guadalajara, the second-largest city in Mexico.
La Yesca silver project
The project covers an area of approximately 47.7 square km. Previous exploration activities between 2014 and 2018 included geological mapping, stream sediment and soil geochemical surveys, and widely spaced drilling. A silver-lead-zinc soil geochemical anomaly of more than 500 metres wide by 7.5 km long has been defined.
A total of 4,878 cubed metres in 106 trenches and surface strips, and 7,649 m of diamond drilling in 25 widely spaced drill holes has been completed to test the southern half of the 7.5 km long geochemical anomaly in areas I, II and III. Fifty-six surface trenches and all of the 25 near-vertically drilled holes intersected mineralization, with 22 of the drill holes intersecting multiple mineralized intervals that have defined a northwest-trending 1,100 m long and 200 m wide mineralized zone in Area I, and a 3,500 m long and 400 m wide zone in areas II and III.
Highlights of selected drill hole intercepts (see the assay results for all 25 drill holes table for details):
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Hole ZK3562 intercepted a 3.3 m interval from 197.2 m, grading 744 grams per tonne silver, 0.12 per cent lead and 1.39 per cent zinc.
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Hole ZK3642 intercepted a 10 m interval from 78.8 m, grading 977 g/t Ag, 0.23 per cent Pb and 0.59 per cent Zn, and a 2.3 m interval from 103.8 m, grading 840 g/t Ag, 0.25 per cent Pb and 0.68 per cent Zn, and a six m interval from 127.4 m, grading 388 g/t Ag, 0.11 per cent Pb and 0.45 per cent Zn.
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Hole ZK3721 intercepted a 6.5 m interval from 79.9 m, grading 725 g/t Ag, 0.55 per cent Pb and 1.79 per cent Zn, and a 5.9 m interval from 92.4 m, grading 293 g/t Ag, 0.22 per cent Pb and 1.38 per cent Zn.
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Hole ZK3801 intercepted a 2.4 m interval from 36.1 m, grading 823 g/t Ag, 0.3 per cent Pb and 4.01 per cent Zn, and a three m interval from 140.2 m, grading 718 g/t Ag, 0.21 per cent Pb and 3.34 per cent Zn.
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Hole ZK4002 intercepted a 17 m interval from 195.8 m, grading 252 g/t Ag, 0.76 per cent Pb and 2.1 per cent Zn.
Highlights of selected surface trench samples:
- TC001 from Area I graded 420 g/t Ag, 0.22 per cent Pb and 2.8 per cent Zn across 25.6 m.
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TC111 from Area I graded 389 g/t Ag, 0.09 per cent Pb and 0.25 per cent Zn across 14.3 m.
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BT742 from Area III graded 295 g/t Ag, 2.02 per cent Pb and 1.72 per cent Zn across 47.6 m.
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TC4081 from Area III graded 161 g/t Ag, 1.38 per cent Pb and 1.32 per cent Zn across 32.9 m.
ASSAY RESULTS FOR ALL 25 DRILL HOLES
From To Interval Ag Pb Zn
Hole ID (m) (m) (m) g/t (%) (%)
ZK001 20.6 26.2 5.5 141 0.13 1.28
ZK001 34.2 41.1 7.0 65 0.08 1.24
ZK002 46.4 54.4 8.0 274 0.89 0.84
ZK002 61.4 65.7 4.3 243 0.19 0.90
ZK002 128.0 133.0 5.0 108 0.16 0.48
ZK003 155.0 157.0 2.0 77 0.40 0.51
ZK003 166.7 168.7 2.0 159 0.90 0.59
ZK003 203.4 205.4 2.0 153 0.86 0.75
ZK003 248.8 262.3 13.5 97 0.25 1.15
ZK003 328.9 338.8 9.8 122 0.43 0.57
ZK003 547.6 548.6 1.1 162 0.63 1.75
ZK031 43.4 45.9 2.5 510 0.17 2.34
ZK031 64.4 66.4 2.0 292 0.18 1.39
ZK071 30.1 38.9 8.9 390 0.16 1.89
ZK071 114.4 119.3 5.0 672 0.09 0.84
ZK072 30.0 34.5 4.5 73 0.01 0.31
ZK081 165.8 167.8 2.0 146 0.29 0.67
ZK081 174.0 176.0 2.0 217 0.13 0.29
ZK081 185.0 190.9 5.9 185 0.11 0.59
ZK081 196.9 200.1 3.3 296 0.04 0.36
ZK161 118.0 119.2 1.2 58 0.01 0.03
ZK161 125.1 132.0 6.9 88 0.05 1.05
ZK241 102.7 105.1 2.4 145 0.09 1.51
ZK241 156.4 157.9 1.5 54 0.12 0.13
ZK2001 100.9 103.0 2.1 232 1.36 1.18
ZK2001 314.8 316.1 1.3 67 6.44 12.23
ZK2001 340.4 344.3 3.9 100 2.11 4.47
ZK2041 32.2 38.2 6.0 304 0.36 1.30
ZK2041 68.3 70.9 2.6 328 0.08 2.00
ZK2042 102.5 105.1 2.6 62 0.60 0.80
ZK2081 5.2 6.6 1.4 132 0.09 1.18
ZK2081 182.7 184.0 1.3 84 0.08 0.63
ZK3481 55.4 60.6 5.2 114 0.14 0.43
ZK3481 96.0 98.6 2.6 286 0.23 0.49
ZK3561 48.7 55.0 6.3 112 0.36 0.58
ZK3561 82.8 84.1 1.3 57 0.11 0.13
ZK3561 188.9 190.9 2.0 277 0.12 0.18
ZK3561 268.8 271.4 2.6 46 0.02 0.02
ZK3562 197.2 200.5 3.3 744 0.12 1.39
ZK3562 226.5 227.8 1.3 61 0.06 0.17
ZK3562 422.2 424.8 2.6 173 0.04 0.14
ZK3562 433.9 435.2 1.3 78 0.03 0.68
ZK3641 49.4 72.6 23.2 149 0.42 2.12
ZK3641 79.8 82.4 2.6 135 0.22 1.60
ZK3641 147.7 150.3 2.6 161 0.17 1.26
ZK3641 171.9 174.5 2.6 214 0.21 2.07
ZK3642 78.8 88.7 10.0 977 0.23 0.59
ZK3642 103.8 106.1 2.3 840 0.25 0.68
ZK3642 127.4 133.4 6.0 388 0.11 0.45
ZK3721 79.9 86.4 6.5 725 0.55 1.79
ZK3721 92.4 98.3 5.9 293 0.22 1.38
ZK3722 198.9 204.3 5.3 83 0.14 0.31
ZK3722 210.9 227.2 16.3 222 0.14 0.76
ZK3801 36.1 38.5 2.4 823 0.30 4.01
ZK3801 140.2 143.2 3.0 718 0.21 3.34
ZK4001 54.9 61.2 6.4 121 0.46 2.57
ZK4001 70.8 72.1 1.3 161 0.06 0.38
ZK4001 145.6 147.6 2.1 349 0.33 1.86
ZK4001 234.3 238.2 3.9 310 0.21 3.04
ZK4002 175.1 177.7 2.6 106 0.10 0.21
ZK4002 195.8 212.7 17.0 252 0.76 2.10
ZK4002 262.5 263.6 1.2 59 0.35 0.11
ZK4081 58.0 63.4 5.4 210 0.40 1.73
ZK4081 106.2 107.5 1.3 55 0.16 0.54
ZK4081 143.0 144.3 1.3 143 0.41 0.64
ZK4082 260.5 283.9 23.4 143 0.28 0.32
ZK4082 373.7 375.9 2.2 45 0.17 0.04
ZK4082 507.7 509.0 1.3 136 0.40 0.22
Notes:
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Intervals are drill core length in metres. True widths are unknown.
- A 50 g/t Ag minimum grade was used in calculating the average Ag grades.
As the 25 drill holes were widely spaced, near-vertically drilled and all intercepted mineralization, the previous owner interpreted the silver mineralization as subhorizontal or low-angle dipping zones (30 to 40 degrees). During on-site due diligence trips, Silvercorp geologists observed abundant evidence of steeply dipping (70 to 85 degrees) and northwest (325 degrees) extending structures/mineralization in trenches and outcrops, and observed almost all mineralization fractures in drill cores as near parallel to the cores, yielding further evidence that mineralization may have occurred as subvertical.
This may imply that the mineralized intervals intercepted by these 25 widely spaced drill holes are from multiple, different zones. A hole drilled 100 m away to test trench mineralization may have intercepted new zones rather than the mineralized zone revealed by the trenches. The future drill program will drill holes at a 45-degree angle to either validate this new model or as infill drilling for the low-angle interpretation. For example, trench BT742, with a 47.6 m interval grading 295 g/t Ag, 2.02 per cent Pb and 1.72 per cent Zn, can be easily tested by a 45-degree drill hole, whether it is a low-angle or subvertical zone.
Silvercorp's independent geological consultant also took core samples for reassaying. The results shown in the selected drill core table have large variation, but all have significant, high-silver grades.
SELECTED DRILL CORE SAMPLES FROM DUE DILIGENCE REASSAY COMPARISON
Silvercorp
Hole ID From (m) To (m) Interval (m) Original assay Confirmation assay
Ag (g/t) Pb (%) Zn (%) Ag (g/t) Pb (%) Zn (%)
ZK3561 48.7 55.0 6.3 112 0.36 0.58 99 0.14 0.28
ZK071 114.4 119.3 5.0 672 0.09 0.84 353 0.21 0.39
ZK4002 195.8 207.5 11.8 316 1.09 2.80 546 0.28 1.17
ZK081 196.9 200.1 3.3 296 0.04 0.35 1,650 0.00 0.11
ZK3721 79.9 86.4 6.5 725 0.55 1.79 564 0.49 1.00
ZK002 61.4 66.7 5.3 204 0.17 0.80 1,419 0.08 0.63
ZK3722 210.9 227.2 16.3 222 0.14 0.76 63 0.11 0.42
ZK3801 140.2 143.2 3.0 718 0.21 3.34 83 0.20 0.51
ZK3562 197.9 200.5 2.6 943 0.15 1.78 387 0.07 0.99
Silvercorp development strategy
With successfully incubating New Pacific Metals Corp. and Whitehorse Gold Corp., Silvercorp intends to follow the same strategy and list New Infini as an independent public company, with a controlling interest, in the near future. This approach allows each company to operate independently on projects in different jurisdictions to reduce management risk and enables each company to pursue independent growth and capital allocation strategies while still maintaining Silvercorp's interest, leadership and core values. The success of this strategy is attributed to a disciplined and methodical approach in structuring and financing each new opportunity, and selecting and incentivizing dedicated and experienced executives and directors with a strong commitment to sustainable development and shared value creation.
Agreement details and share
structure
In December, 2020, Silvercorp's 100-per-cent-owned subsidiary, New Infini, acquired a 100-per-cent interest in Infini Resources SA de CV, a Mexican corporation, which holds a 100-per-cent interest in the La Yesca project, in return for a $9.25-million (U.S.) cash payment and a 45-per-cent interest in New Infini shares to the arm's-length vendors, pursuant to the terms and conditions of a framework agreement.
The cash payment of $9.25-million (U.S.) was provided by Silvercorp ($7.57-million (U.S.)) and a group of Silvercorp's directors, officers, employees and consultants ($1.68-million (U.S.)) in return for their interests of 45 per cent and 10 per cent, respectively, in New Infini.
Through New Infini, Silvercorp assumed management and control of Infini SA, and became the operator of the project.
A discovery payment of up to $30-million calculated on the basis of 20 U.S. cents per ounce of silver resources as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects, is payable by New Infini to the vendors subject to certain permitting considerations.
A subsequent private placement financing for New Infini in January, 2021, raised $4-million (U.S.) by issuing eight million shares of New Infini at 50 U.S. cents per share to Silvercorp, the vendors and the management team. This will be sufficient to finance an initial drilling campaign of 10,000 m prior to listing New Infini as an independent public company.
The current New Infini share structure after the January, 2021, financing has Silvercorp at 21 million shares (43.75 per cent), the vendors at 18.6 million shares (38.75 per cent) and management team at 8.4 million shares (17.5 per cent) of the total 48 million shares outstanding.
Future exploration plans
New Infini has assembled a team in Mexico to apply for drilling permits and to initiate a phase I 10,000 m drilling program, which is expected to start in Q2 2021, once permits are received.
The technical information contained in this news release has been reviewed and approved by Ruijin Jiang, PGeo, who is a qualified person for the purposes of NI 43-101.
About Silvercorp Metals Inc.
Silvercorp is a profitable Canadian mining company producing silver, lead and zinc metals in concentrates from mines in China. The company's goal is to continuously create healthy returns to shareholders through efficient management, organic growth and the acquisition of profitable projects. Silvercorp balances profitability, social and environmental relationships, employees' well-being, and sustainable development.
We seek Safe Harbor.
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