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Technical Report

NI 43-101 Technical Report Update on the Ying Ag-Pb-Zn Property in Henan Province, People’s Republic of China

Silvercorp Metals Inc.

Henan Province, China

In accordance with the requirements of National Instrument 43-101 “Standards of Disclosure for Mineral Projects” of the Canadian Securities Administrators

Qualified Persons:

H.A. Smith, P.Eng.

R. Webster, MAIG

G.K. Vartell, P.Geo., P.Geol.

S. Robinson, P.Geo., MAIG

R. Chesher, FAusIMM (CP)

G. Ma, P.Geo.

A. Riles, MAIG

AMC Project 722008

Effective date: 20 September 2022

Report date: 3 November 2022

Unearth a smarter way

AMC Mining Consultants (Canada) Ltd. (AMC) was commissioned by Silvercorp Metals Inc. (Silvercorp) to prepare a Technical Report (Ying 2022 Technical Report or Technical Report) on the Ying silver-lead-zinc property (Property) in Henan Province, China, encompassing the SGX, HZG, HPG, TLP, LME, LMW, and DCG underground mines. The seven mines are collectively referred to as the Ying mine or Ying mines in the Technical Report. AMC has previously prepared Technical Reports on the Property in 2020 (filed 14 October 2020, effective date 31 July 2020); 2017 (filed 24 February 2017, effective date 31 December 2016); 2014 (filed 5 September 2014, effective date 31 December 2013); 2012 (filed 15 June 2012, effective date 1 May 2012); and in 2013 (minor update to 2012 report, filed 6 May 2013, effective date 1 May 2012).

Six of the seven authors of the Technical Report are independent Qualified Persons (QPs). Three of the independent authors have visited the Ying Property. Mr G. Ma, QP, of Silvercorp, has made numerous site visits since 2018, the most recent of which was 15 October to 4 November 2021. The latest AMC visit, by Mr H.A. Smith and Dr G.K. Vartell, was in July 2016. Earlier QP visits were made in February 2012 and September 2013. During the site visits, all aspects of the project have been examined by the QPs, including drill core, exploration sites, underground workings, processing plant, laboratory, and other surface infrastructure. Plans for a more recent AMC visit have been postponed because of the COVID-19 pandemic, and policies related to China travel. Prior to the release of the Technical Report, there has been a particular focus, throughout the report generation, on regular and detailed communication, inclusive of video conferencing, between AMC and Silvercorp personnel, both at the Ying site and in Canada.

Silvercorp is a Canadian mining company producing silver, lead, and zinc metals in concentrates from mines in China. It is listed on both the TSX and NYSE as SVM. Through wholly owned subsidiaries, Silvercorp has effective interests of 77.5% in the SGX, HZG, TLP, LMW, and DCG mines, and 80% in the HPG and LME mines. It has all the exploration and mining permits necessary to cover its mining and exploration activities. There are no known or recognized environmental issues that might preclude or inhibit a mining operation in the Ying Property area.

The Property is about 240 kilometres (km) west-southwest of Zhengzhou, the capital city of Henan Province, and 145 km south-west of Luoyang, which is the nearest major city. The nearest small city to the project area is Luoning, about 56 km by paved roads from Silvercorp’s Ying mill site. The project areas have good road access and operate year-round. The area has a continental sub-tropical climate with four distinct seasons.

Silver-lead-zinc mineralization in the Ying district has been known and intermittently mined for several hundred years. Silvercorp acquired an interest in the SGX project in 2004, the HPG project in 2006, and the TLP / LMW / LME projects in late 2007. Annual production has been consistent in recent years, ranging from 602,000 to 651,000 tonnes milled between FY2021 and FY 2021, but with tonnages around the higher end of that range from FY2021 through to the end of Q3 2022.

The Property is situated in the 300 km-long west-northwest trending Qinling orogenic belt, a major structural belt formed by the collision of two large continental tectonic plates in Paleozoic time. Rocks along the orogenic belt are severely folded and faulted, offering optimal structural conditions for the emplacement of mineral deposits. Several operating silver-lead-zinc mines, including those in the Property, occur along this belt. The dominant structures in the region are west-northwest trending folds and faults, the faults comprising numerous thrusts with sets of conjugate shear

structures trending either north-west or north-east. These shear zones are associated with all the important mineralization in the district.

Mineralization predominantly comprises numerous mesothermal, silver-lead-zinc-rich, quartz-carbonate veins in steeply-dipping, fault-fissure zones which cut Precambrian gneiss and greenstone. The veins thin and thicken abruptly along the structures in classic “pinch-and-swell” fashion with widths varying from a few centimetres up to a few metres. The fault-fissure zones extend for hundreds to a few thousand metres along strike. To date, significant mineralization has been defined or developed in at least 356 discrete vein structures, and many other smaller veins have been found but not, as yet, well explored. Included within in the number of veins is ten new gold-rich veins which have been a recent exploration target for Silvercorp. The vein systems of the various mine areas in the district are generally similar in mineralogy, with slight differences between some of the separate mine areas and between the different vein systems within each area.

From 1 January 2020 to 31 December 2021, Silvercorp drilled 2,074 underground holes and 669 surface holes, for a total of approximately 492,337 metres (m). Most drill core is NQ-sized (48 millimetres (mm)). Drill core recoveries are influenced by lithology and average 98 – 99%. Core is logged, photographed, and sampled in the core shack on surface. Samples are prepared by cutting the core in half with a diamond saw. One half of the core is marked with sample number and sample boundary and then returned to the core box for archival storage. The other half is placed in a labelled cotton cloth bag with sample number marked on the bag. The bagged sample is then shipped to the laboratory for preparation and assaying.

Other than drilling, the mines have been explored primarily from underground workings. The workings follow vein structures along strike, on levels spaced approximately 40 m apart. Channel samples across the structures are collected at 5 m intervals. From 1 January 2020 to 31 December 2021, Silvercorp undertook 93,740 m of tunneling, and collected 45,197 channel samples.

Silvercorp has implemented industry standard practices for sample preparation, security, and analysis. All core and channel sampling is completed by Silvercorp personnel. Samples from NQ drill core are collected following detailed geological logging at secure core processing facilities located at each mine site. Bagged and sealed half core drillhole samples are transported by Silvercorp personnel or courier to one of nine commercial laboratories. Channel sampling is completed by cutting channels into walls or faces of tunnels and cross cuts and collecting composite chip samples. Channel samples are transported by Silvercorp personnel to the Ying site laboratory at the mill complex in Luoning County.

The sample preparation procedures used at the various laboratories (nine used since January 2020), incorporate sample drying to between 60°Celsius (C) and 105°C, crushing to at least 3 mm, subsampling via splitter or mat and scoop, and then pulverizing to 74 µm (micron). Analytical procedures for Ag, Pb, and Zn typically include a two or four acid digest of between 0.1 gram (g) and 1 g pulp followed by AAS or ICP with various instrumental finishes. Fire assay is used for gold analysis, and silver overlimit analysis.

Silvercorp has established Quality Assurance / Quality Control (QA/QC) procedures which monitor accuracy, precision and sample contamination during sampling, preparation, and analytical processes through the inclusion of certified reference materials (CRM), coarse blanks, and field duplicates with sample batches. Umpire sampling has been completed by several independent laboratories. The QA/QC program for 1 January 2020 to 31 December 2021 included 4,860 CRMs, 4,852 coarse blanks, 5,210 quarter core field duplicates, and 252 umpire samples with 210,235 drillhole samples. A further 898 CRMs, 904 coarse blanks, 905 field duplicates, and 1,140 umpire samples were submitted with the 22,075 channel samples. Insertion rates for the various types were between 1.9% and 3.0%.

Silvercorp’s present protocols employed at the Ying Project do not encompass all aspects of a comprehensive QA/QC program, do not include optimal rates of insertion, and have not included rigorous monitoring of results in real time. Despite these issues, a review by the QP shows that there are no material accuracy, precision, or systematic contamination errors within the Ying sample database. The QP considers the Ying sample database to be acceptable for Mineral Resource estimation.

Data verification was completed by the QPs, and while some minor issues were found, the QPs do not consider the issues noted to have a material impact on Mineral Resource estimates. The QPs consider the data to be acceptable for Mineral Resource estimation.

The Mineral Resource estimates for the SGX, HZG, HPG, TLP, LME, LMW, and DCG deposits at the Ying Property were prepared by Mr Shoupu Xiang, Resource Geologist of Silvercorp, Beijing. Grade estimation was completed for a total of 356 veins using a block modelling approach using the inverse distance squared (ID²) interpolation method in Micromine software. The interpretation and construction of mineralization wireframes was completed by digitizing vein strings in cross section, and then linking strings to create three-dimensional (3D) wireframes. Mineralization interpretations were constructed primarily based on silver, lead, zinc, and where relevant, gold grades, but also incorporated mapping data from underground workings and logging from drill core. Mineralized veins at the SGX, HPG, and HZG mines were modelled using a nominal threshold of 140 g/t AgEq. Mineralized veins at the TLP, LMW, LME, and DCG mines were modelled using a nominal threshold of 120 g/t AgEq. A composite interval of 0.4 m was selected for all mines based on the predominant sample length. Appropriate top capping was used where required which was different for each vein. Grade estimates were completed for Ag and Pb in all deposits, Zn in several deposits, and Au within select veins at select deposits.

Grade estimates have been reviewed by independent QPs Mr Rod Webster, MAIG, Mr Simeon Robinson, P.Geo., MAIG, Dr Genoa Vartell, P.Geo. of AMC. Mr Webster takes responsibility for the SGX, HPG, HZG LMW, and DCG estimates. Mr Robinson takes responsibility for the TLP estimate. Dr Vartell takes responsibility for the LME estimate.

The Mineral Resources include material (approximately 25% of the total Mineral Resources based on AqEq metal) below the lower elevation limit of Silvercorp’s current mining licenses. However, because of the nature of Chinese regulations governing applications for new or extended mining licenses, the QPs for the Mineral Resource estimation are satisfied that there is no material risk associated with the granting of approval to Silvercorp to extend the lower depth limit of its licenses and to develop these Mineral Resources as and when required.

Mineral Resources by mine for the Property as of 31 December 2021 are presented in Table 1.1. These estimates incorporate Ag and Pb in all deposits, Zn in select deposits, and Au within select veins at select deposits. Mineral Resources are reported above a cut-off grade (COG) based on in-situ values in silver equivalent (AgEq) terms in grams per tonne (g/t). COGs incorporate mining, processing, and general and administrative (G&A) costs which were provided by Silvercorp for each mine and reviewed by the QP for Mineral Reserves. The AgEq formula and COG applied to each mine are noted in the footnotes of Table 1.1.

Notes:

A comparison of Mineral Resource estimates between 31 December 2019 and 31 December 2021 indicates the following:

Reasons for the differences in grade, tonnes, and contained metal include conversion to higher categories arising from drilling and level development, generally higher cut-off grades due to inflation, and depletion due to mining.

The Mineral Reserve estimates for the Property were prepared by Silvercorp under the guidance of independent QP Mr H.A. Smith, P.Eng., who takes responsibility for those estimates. Table 1.2 summarizes the Mineral Reserve estimates for each mine and for the entire Ying operation. 46.9% of the Mineral Reserve tonnage is categorized as Proven and 53.1% is categorized as Probable.

Notes to Mineral Reserve Statement:

96.5% Ag, 95.9% Pb; DCG – 91.5% Au, 91.5% Ag, 90.8% Pb, 68.3% Zn.

The Mineral Reserve estimation assumes that current predominant stoping practices will continue to be employed at the Ying property, namely cut and fill resuing and shrinkage stoping for most veins, using hand-held drills (jacklegs) and hand-mucking within stopes, and loading to mine cars

by rocker-shovel or by hand. The largely sub-vertical veins, generally competent ground, reasonably regular vein width, and hand-mining techniques using short rounds, allows a significant degree of selectivity and control in the stoping process. Minimum mining widths of 0.5 m for resuing and 1.0 m for shrinkage are assumed. The QP has observed the resuing and shrinkage mining methods at the Ying property and considers the minimum extraction and mining width assumptions to be reasonable.

Minimum dilution assumptions are 0.10 m of total overbreak for a resuing cut and 0.2 m of total overbreak for a shrinkage stope.

For a small number of veins with relatively low-angle dip – generally veins with significant gold content – room and pillar stoping with slushers is now also used at the Property.

For the total tonnage estimated as Ying Mineral Reserves, approximately 62% is associated with resuing-type methods and approximately 38% with shrinkage.

The sensitivity of the Ying Mineral Reserves to variation in cut-off grade (COG) has been tested by applying a 20% increase in COG to Mineral Reserves at each of the Ying mines. The lowest sensitivities are seen at SGX and DCG with, for the entire Ying Mining District, an approximate 10% reduction in AgEq ounces for a 20% COG increase, demonstrating relatively low overall COG sensitivity.

Total Ying Mineral Reserve tonnes are approximately 66% of Mineral Resource (Measured plus Indicated) tonnes. Gold, silver, lead, and zinc Mineral Reserve grades are 99%, 100%, 96%, and 100% respectively of the corresponding Measured plus Indicated Mineral Resource grades. Metal conversion percentages for gold, silver, lead, and zinc are 65%, 66%, 63%, and 66% respectively.

Underground access to each of the mines in the steeply-sloped, mountainous district is via adits at various elevations, inclined haulageways, shaft / internal shafts (winzes), and declines (ramps).

The mines are developed using trackless equipment – 20 tonne (t) trucks and single-boom jumbos; small, conventional tracked equipment – electric / diesel locomotives, rail cars, electric rocker shovels; and pneumatic hand-held drills.

The global extraction sequence is top-down between levels, and generally outwards from the central shaft or main access location. The stope extraction sequence is bottom-up, with shrinkage and resuing being the main mining methods. Jacklegs are used in stope blast drilling. In-stope ore handling is by hand-carting / hand-shoveling to specially manufactured steel-lined ore passes for resuing stopes, and by gravity to draw points for shrinkage stopes. Production mucking uses mostly hand shovels or, occasionally, rocker shovels, with rail cars and battery-powered or diesel locomotives transporting ore to the main shaft, inclined haulageway, or main loading points in declines. Part of the TLP, SGX, LME, LMW, HZG, HPG, and DCG mines still use small tricycle trucks with a payload of up to three tonnes each for hauling ore to the surface. Mine trucks are used in all the ramp areas for hauling ore and waste to the surface. Excluding the ramp and tricycle areas, other mine sections use rail cars for hauling ore and waste to the surface. Some hand picking of high-grade ore and of waste may be carried out on surface at either ore pile or sorting belt, with transport to the centralized processing plants being via 30 t and 45 t trucks.

Table 1.3 summarizes the Silvercorp reconciliation between Mineral Reserve estimates in areas mined and production as mill feed for the Ying mines from 1 January 2020 to 31 December 2021.

Notes:

The QP makes the following observations relative to the data in Table 1.3:

Silvercorp has placed a high level of focus on dilution control in recent years and has revised its stockpiling and record keeping procedures and implemented a work quality checklist management enhancement program. The QP has previously endorsed these actions and continues to do so. It is also recommended that Silvercorp undertake periodic mill audits aimed at ensuring optimum process control and mill performance.

A comparison of Mineral Reserve estimates between end-2019 (2020 Technical Report) and end-2021 (2022 Technical Report) indicates the following (the 2021 Mineral Reserves do not include ore mined since end-2019):

Table 1.4 is a summary of the projected life-of-mine (LOM) production for each of the Ying mines and for the entire operation based on the 31 December 2021 Mineral Reserve estimates.

Table 1.4 Ying Mines LOM production plan

Notes:

Prior to operation of the mines and the construction of Silvercorp’s mills, metallurgical tests had been conducted by various labs to address the recoveries of the different types of mineralization. TLP mineralization was tested by the Changsha Design and Research Institute (CDRI) in 1994, SGX mineralization was tested by Hunan Nonferrous Metal Research Institute (HNMRI) in May 2005, HZG mineralization was tested by Tongling Nonferrous Metals Design Institute (TNMDI) in 2006, and HPG mineralization was tested by Changchun Gold Research Institute (CCGRI) in 2021.

Additional mineralization testing in 2021 was completed by CITIC Heavy Industry Machinery Co., Ltd (CITIC). CITIC was commissioned to conduct grindability tests on sulphide ore from SGX, TLP, LME, and LMW, and oxide ore from TLP and HPG.

The results predicted a metallurgically amenable ore with clean lead-zinc separation by differential flotation and, with the possible exception of silver halides in the upper zones of the TLP deposit, high silver recoveries. On-site metallurgists have conducted plant-tuning programs to continually improve metallurgical performance.

Silvercorp runs two processing plants, Plants 1 and 2, at the Property, with a total current design capacity of about 2,800 tonnes per day (tpd). The two plants are situated within 2 km of each other. Both were designed based on the lab tests completed by HNMRI in 2005. Plant 1 (Xiayu Plant - originally 600 tpd, upgraded to 800 tpd) has been in operation since March 2007. Plant 2 (Zhuangtou Plant) has been in production since December 2009, with an expansion from 1,000 tpd to 2,000 tpd completed in October 2011. Although current design processing capacity is about 2,800 tpd, it is understood that the actual capacity could reach 3,000 – 3,200 tpd. However, current LOM planning requires that the plants operate up to 2,000 tpd.

The overall processes of the two plants are similar and comprise crushing, grinding, flotation of lead and zinc concentrates, and concentrate dewatering. Plant 1 currently produces only a lead / silver concentrate. In the LOM plan, the majority of ore tonnes will be processed through Plant 2, with Plant 1 being used as a backup to process low grade ore or development ore from LM, HZG, and part of TLP.

To optimize profitability, high grade lead concentrate from Plant 2 is blended with middle grade lead concentrate from Plant 1.

SGX / HPG ores also may contain high-grade, large-size galena lumps with characteristic specular silver-grey appearance. These may be hand-sorted at the mine sites, crushed, and then shipped by dedicated trucks to Plant 1. The lumps can be milled in a dedicated facility, and then sold directly, or mixed with flotation lead concentrate for sale.

Plants 1 and 2 are currently operating at throughput levels below plant design. Lead and silver recovery targets are being met; however, zinc recovery is lower than design, attributed to lower than design zinc feed grades.

After innovation and modification to both plants over last few years, lead and silver recoveries have increased significantly. Improvements have been consistently targeted on process system and other facilities both in Plant 1 and Plant 2 to improve the metal recovery and reduce energy consumption.

Historically, higher-grade feed from SGX has enhanced plant performance but, with the proportion of SGX ore decreasing, the challenge is to maintain similar metallurgical performance on lower grade feedstock. From recent performance, it appears that recoveries are being maintained but concentrate grades are lower than target, however, not to the extent where there is a major deterioration in smelter terms.

A new plant (Plant 3) has been designed by the Changchun Gold Design Institute using data from their 2021 testing of HPG mineralization. Plant 3 is under construction and is scheduled to be in production in July 2024. The flowsheet of Plant 3 is similar to that of Plant 2, but the equipment is larger, the processing capacity is greater, more advanced technology is employed, and the flowsheet is more flexible. It can handle silver-lead-zinc ore, silver-lead ore, copper-lead ore, and gold ore.

Silvercorp operates the Ying mines mainly using contractors for mine development, production, ore transportation, and exploration. The mill plant and surface workshops are operated and maintained using Silvercorp personnel. Silvercorp provides its own management, technical services, and supervisory staff to manage the mine operations.

A recent snapshot of the Ying mines workforce showed a total of 3,296 persons, comprising 902 Silvercorp staff, 75 Silvercorp hourly employees, and 2,319 contract workers.

There are two current Ying TMFs. TMF 1 served both Mill Plant 1 and Mill Plant 2 during the period of 2007 – 2012. Since TMF 2 was put into operation in April 2013, the two TMFs serve their respective mill plants: TMF 1 serves Mill Plant 1, TMF 2 serves Mill Plant 2.

The TMFs were designed based on then current Mineral Resource / Mineral Reserve estimations and LOM production projections. Subsequent resource expansion and increased production projections indicate that the current tailings capacity will not be adequate for the full Ying LOM.

A third TMF, Shimengou TMF, is being built in the Shimengou valley, which serves as a branch of the Chongyanggou river, within the territory of Xiayu Township, Luoning County. The Shimengou TMF is located to the north of Mill Plant 2. The starter dam is about 1.7 km from Mill Plant 2 and about 500 m from the (downstream) Chongyanggou river. The TMF is planned to be constructed in two phases, with approximately 10.2 million cubic metres (Mm³) of storage capacity in Phase 1, and approximately 8.9 Mm³ of capacity in Phase 2, for a total storage capacity of 19.1 Mm³. The Company expects that Phase 1 of the TMF by will be completed by mid-2024.

The seismic rating is in accordance with the China Seismic Intensity Scale (CSIS), which is similar to the Modified Mercali Intensity (MMI) scale, now used fairly generally and which measures the effect of an earthquake at the surface. The QP has previously recommended that Silvercorp review the design basis acceleration to ensure consistency with the most up-to-date Ying site seismic zoning classification and associated parameters. The QP understands that Silvercorp is reviewing and assessing seismic data relevant to TMFs 1 and 2 and as part of the design process for TMF 3.

For TMF 1, after a further two years of service (end of 2023), it is projected that the dam maximum elevation of 650 m will be reached at design production rates.

Fore TMF 2, after approximately 3.6 years of additional service (second half of 2025), it is anticipated that the maximum dam elevation of 690 m will be reached at design production rates.

The QP understands that site-specific risk assessment, such as for geotechnical risk, was originally carried out by Henan Luoyang Yuxi Hydrological & Geological Reconnaissance Company, with more recent assessments done by other organizations. The QP has previously recommended that the dam classification under the Chinese system be reviewed in the context of recent international classifications. The QP understands that Silvercorp is reviewing recent international classification norms relative to the current Ying TMF classifications.

Flood calculations have been performed appropriate to the Chinese system Grade III classification of the TMFs, which requires the flood control measures to meet a 1 in 100-year recurrence interval for design purposes, with a 1 in 500-year probable maximum flood criterion also. Safety and reliability analyses for the TMFs have been carried out in accordance with the Safety Technical Regulations for Tailings Ponds (AQ2006-2005) and under the Grade III requirements.

As a general comment with respect to the Ying TMFs, it is recommended that Silvercorp reference the Global Industry Standard on Tailings Management (‘Global Industry Standard’), which is aimed at strengthening current best practices for tailings dams in the mining sector. Recent announcements by the Chinese Ministry of Emergency Management promote similar practice improvements.

The QP further recommends that:

Reclaimed water from the tailings storage ponds and overflows from the two concentrators is recycled to minimize fresh water requirements. Zero discharge of the process water has been achieved at both TMFs in no-rainfall seasons.

There are rock waste dumps at each mine on the Ying Property. Based on mine and development plans, the mines will move about 3.16 Mm³ of waste rock to the surface dumps during the remaining mine life. The excess capacities of the existing dumps are calculated as 2.63 Mm³.

At the end of April 2021, the Hongfa Aggregate Plant (Hongfa) was constructed to recycle and crush waste rock from the Ying Mining District. Since Hongfa has been in operation, Silvercorp has evaluated each waste dump, and decided to reclaim three waste dumps (two waste dumps at the SGX mine, and one at the HZG mine). The role of the other waste dumps is changing to temporary waste rock storage, from which waste rock is hauled to the Hongfa plant each day. In 2021, the Hongfa plant consumed 380,305 t of waste rock and produced 349,108 tonnes of sand and gravel aggregates. Profit from the Hongfa operation, after capital recovery, will be shared between the local government, the local communities, and employees.

Power for the Ying Property is drawn from Chinese National Grids with high-voltage lines to the different mine camps and mill plants. At SGX, one 35 kilovolts (kV) overhead line supplies main power for all production, and two 10 kV lines act mainly as a standby source of power in case of disruption. In addition, two 1,500 kilowatts (kW) and one 1,200 kW diesel generators installed at one of the substations act as back-up power supply in the event of a grid power outage.

In 2020, access to the SGX / HZG mine from the mill-office complex was via a 7 km paved road to Hedong wharf of Guxian Reservoir, and then across the reservoir by boat to the mine site. Silvercorp shipped the ore from the SGX / HZG and HPG mines to Hedong wharf by two large barges that could carry up to five 45-tonne trucks. Since the beginning of 2021, ore transport from the SGX / HZG and HPG mines has changed to an alternative ore transport route. This route is via a 10 km road that passes through three tunnels in sequence, with three bridges connecting the tunnels. The HPG mine can be accessed by 12 km paved road, south-west of the main office complex. The TLP, LME, and LMW mines are approximately 15 km south-east of the main office complex and are accessed

by paved road along the Chongyang River. A 1,756 m transportation ramp was built in 2020 from the TLP camp area to the DCG mine for ore haulage. The DCG project can also be accessed by a 10.5 km paved road, south-southwest of the mills.

Domestic water for SGX mine is drawn from the Guxian Reservoir, while water for the HPG, TLP, LM, HZG, and DCG mines comes from nearby creeks and springs. Mine production water for drilling and dust suppression is sourced from underground.

Contracts for underground mining operations are in place with several Chinese contracting firms.

Lead and zinc concentrates are marketed to existing smelters customers in Henan and Shaanxi provinces and appropriate terms have been negotiated, on terms that the QP considers to be aligned with global smelter industry norms. Silver payables of approximately 90% are similarly in accord with industry norms.

Monthly sales contracts are in place for the lead concentrates with leading smelters, mostly located in Henan province. For the zinc concentrate, sales contracts are in place with Henan Yuguang Zinc Industry Co. Ltd. All contracts have freight and related expenses to be paid by the smelter customers. The key elements of the smelter contracts are subject to change based on market conditions when the contracts are renewed each month.

Silvercorp has all the required permits for its operations on the Property. The existing mining permits cover all the active mining areas and, in conjunction with safety and environmental certificates, give Silvercorp the right to carry out full mining and mineral processing operations. Seven safety certificates have been issued by the Department of Safety Production and Inspection of Henan Province, covering the SGX mine, HZG mine, Zhuangtou TMF, Shiwagou TMF, HPG mine, TLP mine (west and east section), LMW mine, LME mine, and DCG mine. Five environmental certificates have been issued by the Department of Environmental Protection of Henan Province, covering the Yuelianggou project (SGX mine and 1,000 tpd mill plant), HPG mine, TLP mine, LMW mine, LME mine, DCG mine, and the 2,000 tpd mill plant built in 2009. For each of these certificates, there are related mine development / utilization and soil / water conservation programs, and rehabilitation plan reports. Silvercorp has also obtained approvals and certificates for wastewater discharge locations at the SGX mine, the HPG mine, and the two TMFs. All certificates must be renewed periodically.

There are no cultural minority groups within the area surrounding the general project. The culture of the broader Luoning County is predominantly Han Chinese. No records of cultural heritage sites exist within or near the SGX, HZG, HPG, TLP, LME, LMW, and DCG project areas. The surrounding land near the mines is used predominantly for agriculture. The mining area does not cover any natural conservation, ecological forests, or strict land control zones. The current vegetation within the project area is mainly secondary, including farm plantings. Larger wild mammals have not been found in the region. Small birds nesting and moving in the woodland are observed occasionally. The surrounding villagers raise domestic animals, such as chickens, ducks, pigs, sheep, goats, and cows etc.

Silvercorp has made a range of cash donations and contributions to local capital projects and community support programs, sponsoring university students, and undertaking projects such as road construction and school repairs, upgrading, and construction. Silvercorp has also made economic contributions in the form of direct hiring and retention of local contractors, suppliers, and service providers.

Silvercorp’s main waste by-products are waste rock produced during mining operations and the mine tailings produced during processing. There is also minor sanitation waste produced. Waste rock is deposited in various waste rock stockpiles adjacent to the mine portals. Waste rock is mainly comprised of quartz, chlorite and sericite, kaolin and clay minerals and is non-acid generating. Once a waste rock stockpile is full (or at the time of site closure), it will be covered with soil and re-vegetated. For stabilization, retaining wall structures are built downstream of each waste rock site. Also, a diversion channel is constructed upstream to prevent high water flows into the stockpile and the slope surface from washing out. Some waste rock stockpiles at SGX, HPG, HZG, and LMW have already been covered with soil and re-vegetated.

Process tailings are discharged into purpose built TMFs, which have decant and under-drainage systems to provide for flood protection and for the collection of return water. Daily inspections are undertaken for the tailings pipelines, TMF embankment and the seepage / return water collection system. After the completion of the TMFs, the facilities will be covered with soil and vegetation will be replanted. The SGX Environmental Impact Assessment (EIA) Report states that the tailings do not contain significant sulphides and have no material potential for acid generation.

The Ying operation has an environmental protection department consisting of seven full-time staff. The full-time environment management personnel are mainly responsible for the environment management and rehabilitation management work in the Ying Property.

The monitoring plans include air and dust emissions and noise and wastewater monitoring. The monitoring work is completed by qualified persons and licensed institutes. Reported test results from 2016 to 2022 indicate that surface water, sanitary / process plant wastewater and mining water are in compliance with the required standards; also, that project-stage completion inspection results were all compliant for wastewater discharge, air emission, noise and solid waste disposal. There have been a few exceptional cases in which Pb concentrations slightly exceeded the permitted limit of 0.011 mg/L at the general discharge point after sedimentation tank for both SGX and TLP mines.

Maintaining water quality for the Guxian Reservoir, while operating the SGX and HPG projects, is a key requirement in the project environmental approvals. Silvercorp has created a SGX / HPG surface water discharge management plan which comprises collection and sedimentation treatment of mine water combined with a containment system (i.e., zero surface water discharge), and installation of a stormwater drainage bypass system. Overflow water from the mill process and water generated from the tailings by the pressure filter are returned to the milling process to ensure that wastewater (including tailings water) is not discharged.

Water from mining operations is reused for the same purpose and the remaining water is treated according to the Surface Water Quality Standards and Integrated Wastewater Discharge Standard to meet the Class III requirements of surface water quality and Class I wastewater quality before being discharged to Guxian Reservoir at discharge points approved by the Yellow River Management Committee in Luoning County. Monthly monitoring by the Luoyang Liming Testing Company and Yellow River Basin Environmental Monitoring Centre indicates that water discharged to the surface water body is in compliance with standards.

Except for one small creek, there are no surface water sources near the TLP and LM mines, and no mining water is discharged to this creek from the mines. There is a limited volume of mining water generated from the lower sections of the TLP and LM mines, most of which is used in mining activities, and none is generated from the upper sections.

There is a groundwater monitoring program for the processing plant area, but not for the mining areas. It is recognized that there is no requirement under Chinese environmental approvals to monitor this potential impact. The QP understands that test results indicate that groundwater quality is in compliance with the required standard.

Silvercorp’s production activities are compliant with Chinese labour regulations. Formal contracts are signed for all the full-time employees with wages well above minimum levels. The company provides annual medical surveillance and checks are conducted for its employees before, during and after their employment with the Company. The Company does not use child or under-aged labour.

Remediation and reclamation plans were developed during the project approval stage, including measures for project construction, operation, and closure. From 2016 through 2021, the Company spent approximately $4.8 million (M) on environmental protection, including dust control measures, wastewater treatment, solid waste disposal, the under-drainage tunnel, soil and water conservation, noise control, ecosystem rehabilitation, and emergency response plans. In the same period, a land area of 444,067 square metres (m²) was planted with trees and grasses, as planned in the EIA; of this, 20,496 m² of land was planted in 2020 and 52,361 m² in 2021. Unused mining tunnels have been closed and rehabilitation coverage at all the mines has been undertaken.

Mine closure will comply with the Chinese national regulatory requirements. In accordance with those regulatory requirements, Silvercorp will complete a site decommissioning plan at least one year before mine closure. Site rehabilitation and closure cost estimates will be made at that time.

An exchange rate of US$1 = 6.50 RMB is assumed for all capital and operating cost estimates.

Table 1.5 indicates anticipated capital expenditures on exploration and mine development; facilities, plant, and equipment; and general investment capital through to the projected end of mine life in 2037.

Table 1.6 indicates planned capital expenditures for construction and commissioning of Mill Plant 3 (completion projected end-2023) and a new TMF (first-phase completion projected end-2024).

The QP considers the projected capital costs to be reasonable relative to the planned exploration, development, mining, processing, and associated site facilities, equipment, and infrastructure.

Notes: Numbers may not compute exactly due to rounding. *FY2022 only includes Q4.

Note: Numbers may not compute exactly due to rounding.

Major operating cost categories are mining, shipping, milling, G&A, product selling, Mineral Resources tax, and government fees and other taxes. Silvercorp utilizes contract labour for mining on a rate per tonne or a rate per metre basis. The contracts include all labour, all fixed and mobile equipment, materials, and consumables, including fuel and explosives, which are purchased through the Company. Ground support consumables such as timber and power to the portal areas are the responsibility of the Company. Shipping costs are for moving ore from each mine to the processing plant. Principal components of the milling costs are utilities (power and water), consumables (grinding steel and reagents) and labour, each approximately one third of the total cost. G&A costs include an allowance for tailings dam and other environmental costs. Major capital on the two existing tailings storage facilities has already been expended and ongoing costs associated with progressively raising the dams are regarded as an operating cost. From approximately end-2023 (TMF 1) and end-2025 (TMF 2), the focus of tailings dam operating cost estimates moves to TMF 3, for which construction preparation is underway. The provision for Mineral Resources tax is approximately 3% of sales.

The QP notes that the operating cost estimates are reasonably aligned with those used for Mineral Reserve COG determination and considers them to be reasonable relative to the methods and technology used and the scale of operations envisaged over the LOM.

Table 1.7 summarizes projected LOM operating costs, by mine, and for Ying as a whole.

Notes: Numbers may not compute exactly due to rounding.

*Q4 FY2020 not included.

Other than for costs estimated below for exploration tunneling and drilling – total US$24.7M and which is part of planned LOM capital expenditures, the QPs consider that implementation of the following recommendations will form part of the day-to-day operating cost of the Ying mines.

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