Silvercorp Metals VP for Corporate Development Gordon Neal

In August, Silvercorp Metals(TSX:SVM,NYSEMKT:SVM) reported a 134-percent increase in net income compared to the year-agoquarter, and announced adividend of $1.7 million for equity shareholders.

Silvercorp Metals Vice President for Corporate Development Gordon Neal attributes the company’s success to the Ying District, the GC mine’shigh grades and more importantly to the company’s implementation of a productivity tool called the Enterprise Blog.

As heputs it in the interview below, we are a profitable company in a sea where our competitors and our peers are losing money. The company was evenable to maintain its profitabilityduring Q2 of this year, when silver prices fell.

Watch the video below for more insight from Neal onwhat sets Silvercorp Metals apart from other silver producers, and on how the company has kept silver head grades high for six quarters in a row. You can also read the transcript of our conversation with Neal below; ithas been edited for clarity and brevity.

Investing News Network: What sets Silvercorp Metals apart from other silver producers?

Silvercorp Metals Vice President for Corporate DevelopmentGordon Neal: We are high-grade, narrow-vein miners and we know what we’re doing; we’ve been doing it for a long time. Our peers are struggling a bit this quarter, andit’s really a combination of grade, productivity and dilution control that have helped us to get those kinds of profits. We focus on management productivity in the mine and in the mill. The grade certainly helps, as well as the leadzinc prices.

INN: How has Silvercorp Metals kept silver head grades at or above 300 grams per tonnefor sixquarters in a row?

GN: We started with a few veins on the property in 2004, but now we have 225 veins. If you look at the AMC report that was just put out on our resources and reserves, the mine plan calls for anywhere between 280 to above 300 grams per tonne for us to mine over the next seven to eight years. We have access to that grade of ore for at least the next six to eight years, and if metal prices stay above $15 we should do well on the profit side given our low costs.

INN: What factors have contributed to the decrease in yourall-in sustaining cost per ounce of silver? Do you think this is sustainable over the coming quarters?

GN: We have a productivity tool that we call the Enterprise Blog, an internet-based tool that allows us to look through all of our mine processes and have reporting situations where everything is transparent across the mine and mill operations. It has really helped us to drop our costs and at the same time, increase our head grades.

I think it is sustainable over the long term, as long as we keep focused on making sure that our productivity through this Enterprise Blog system is managed properly.

INN: What are the other highlights from your Q1 results?

GN: We are a profitable company in a sea where our competitors and our peers are losing money. It’s a combination of grade and processes for us. We are in China -sometimes we get a bit of a discount for that – but we are focused on the business of mining, so if you look at our metrics, we are the lowest-cost, highest-margin producer in the silver space and we trade at a multiple that’s lower than everybody else.

This quarter is an example of how we are being profitable when everybody else is not.

INN: What catalysts can investors look forward to in the near future?

GN: Silvercorp has been around for 11, 12years. At this particular stage, given the grade that I just talked about – a little over 300 grams per tonne, between 280 and 300 and above – we are in a steady state. Each quarter, like I said, if silver is above $15, given our types of process and our costs we should be profitable to the tune of $20 to $50 million a year.

On the growth side, we are looking at creative acquisitions. As our financials state, we have $102 million, so we’re looking at creative acquisitions in jurisdictions that are outside of China and that should help us with what I call the China factor.

Investors can count on the fact that our operations are running smoothly and for the next little while should continue to do so.

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