Silvercorp Metals has substantially completed construction of the GC mine in Guangdong province and continues to progress 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 complete and has undergone test operations. 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.
The underground development work for the water sump and pumping station has been completed. The finishing of the concrete rooms for the pumping station and underground main power station is ongoing. Once complete, the pumps and pipes were to be installed. Subsequently, it is expected to take three to six months for the appropriate regulators to complete the inspection and issue the Safety Production Permit.
In the meantime, the company has received a temporary safety production permit which allows for trial mining. The proposed mining method for the major production ore body, V2, has been changed from shrinkage stoping to the more efficient and lower cost longhole stoping method. The longhole stoping method requires additional development work to be completed, including raises and sublevels, before significant mining can commence.
During the September quarter on a consolidated basis, Silvercorp produced 1.0 million ounces of silver, 3012 ounces of gold, 9.5 million pounds of lead and 2.2 million pounds of zinc, compared to 1.3 million ounces of silver, 2481 ounces of gold, 13.9 million pounds of lead and 3.5 million pounds of zinc, in the corresponding quarter of 2012.
For the six months ended September 30, 2013, the company produced 2.4 million ounces of silver, 6789 ounces of gold, 23.0 million pounds of lead and 5.9 million pounds of zinc, compared to 2.5 million ounces of silver, 5134 ounces of gold, 27.6 million pounds of lead and 6.5 million pounds of zinc, in the same period of 2012.
In the Ying Mining District in Henan province, Silvercorp mined 153,102 tonnes of ore, producing 1.0 million ounces of silver, 873 ounces of gold, 9.5 million pounds of lead, and 2.2 million pounds of zinc in the September quarter, compared to 205,811 tonnes of ore in the corresponding quarter of 2012, producing 1.3 million ounces of silver, 1238 ounces of gold, 13.4 million pounds of lead and 3.4 million pounds of zinc.
During the quarter, the company reviewed its operations to identify potential cost saving measures to better adapt to the declining price environment. One of the review’s key findings is that dilutive practices of mining contractors for ore production at Ying Mining District have contributed to recent head grade declines. The company has taken remedial action by modifying the method of calculating the actual amount of ore mined by contractors (the New Method).
The decrease of mine production was due to the shortage of miners as the transition to the New Method resulted in some miners leaving the mine sites and one contractor being dismissed. The company was due to replace the dismissed contractor with the company’s own miners in late November, which is expected to gradually improve production levels while maintaining enhanced control over dilution.
In the September quarter, BYP mine in Hunan province processed 20,073 tonnes of ore compared to 18,564 tonnes in the corresponding period of 2012. During the same comparative periods, the company sold 2140 ounces of gold at a cash cost per ounce of $486 compared to 1213 ounces at a cash cost per ounce of $361.
As at the end of the September quarter, the company completed approximately 2400 metres of development work for the 4800 metre access ramp at LM Mine West in Ying Mining District. It also completed about 17,500 metres 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 district, continued.
At BYP the company has completed installation of shaft equipment for the newly completed 265 metre shaft and construction of the head frame has commenced. This shaft will facilitate mining of the #3 gold mineralization body and the #5 zinc and lead ore body. The construction of a tailings-backfill facility has been completed and has been used in trial runs.
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