The mill and warehouse at Silvercorp's GC project in Guangdong Province.

SILVERCORP Metals has commenced commercial production at the GC Silver-Lead-Zinc Project in Guangdong Province. The mine achieved this milestone during the September quarter as operational results including output level grades and recovery rates significantly and consistently achieved planned levels. Output is now about 800 tonnes per day.

The company has completed all permit submission requirements for the application of the Safety Production Permit, including the final on-site inspection by government authorities. The final documentation process for obtaining the permit was undergoing government review in mid-November and the company expected to receive the new permit prior to the expiry of the temporary permit, which was extended to the end of December.

During the September quarter total ore mined at GC was 70,898 tonnes and total ore milled was 69,144 tonnes. The head grades were 107 grams/tonne for silver, 1.4% for lead and 2.8% for zinc. In the quarter, the GC mine sold 97,000 ounces of silver, 1.4 million pounds of lead, 3.3 million pounds of zinc and 11.3 million pounds of sulphur.

In the quarter, total and cash mining cost per tonne were US$51.69 and US$29.25 respectively, while total and cash milling cost per tonne were $22.81 and $17.59. $1.9 million of exploration and development expenditures were incurred at GC, compared to $3.1 million in the corresponding quarter of 2014.

Meanwhile, the Henan Provincial Department of Land and Resources has renewed the mining permit for Silvercorp’s SGX mine at the Ying Mining District for another 10 years to September 14, 2024. The permit was renewed after a series of required Chinese government documents and reports were prepared and filed, and a first instalment of a mining right fee of RMB 22 million (US$3.55 million) of the total RMB 107.04 million (US$17.32 million) was paid.

The key document required for the renewal was a Chinese government qualified Mineral Resource and Reserve Report, which replaces the original Mineral Reserve Report for SGX filed in 2005 in the application for the original SGX mining permit. The permit was then consolidated in 2008 to include three adjacent exploration permits covered by three 2006 detailed exploration reports. Based on the significant increase in the Chinese Qualified Mineral Resource and Reserve in the 2013 Mineral Reserve Report, the Mining Right Fee was evaluated at RMB 107.04 million.

In comparison with the 2005 and 2006 Mineral Reserve Reports, the Chinese qualified resource estimate in the 2013 Mineral Reserve Report increased by about 271%, and contained silver, lead, and zinc metals increased by about 410%, 366% and 317%, respectively. The increase was due to including results of continuous extensive drilling and tunnelling on the 11 existing veins and 20 newly discovered veins.