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

VANCOUVER, British Columbia – August 13, 2009 – Silvercorp Metals Inc. (“Silvercorp” or the “Company”) 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:

NSR PRICES

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

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:

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.

For further information: SILVERCORP METALS INC., Rui Feng, Chairman & CEO and Lorne Waldman, Corporate Secretary, Phone: (604) 669-9397, Fax: (604) 669-9387, Toll Free 1(888) 224-1881, Email: info@silvercorp.ca, Website: www.silvercorp.ca.

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.