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Silvercorp Metals Inc. Corporate Presentation May 30, 2018

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Silvercorp Metals Inc. Corporate Presentation May 30, 2018

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Silvercorp Metals Inc. Corporate Presentation May 30, 2018

  1. 1. Corporate Presentation May 30, 2018 SVM:TSX/NYSE AMERICAN
  2. 2. FORWARD LOOKING STATEMENTS Safe Harbor Statement under the United States Private Securities Litigation Reform Act of 1995 Except for the statements of historical fact contained herein, the information presented constitutes "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements, including but not limited, to those with respect to the price of silver, lead and zinc, the possibility, timing and amount of estimated future production, costs of production, and reserve determination and reserve conversion rates, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of Silvercorp Metals Inc. (“Silvercorp” or the “Company”) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, risks related to international operations, risks related to Chinese government issuance of mining and related development permits, risks related to joint venture operations, the actual results of current exploration activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, commodity price fluctuations especially in prices of silver, lead and zinc, as well as other factors. Readers should review the Company’s most recent Form 40-F for a more complete discussion of these factors and other risks, particularly under the heading “Risk Factors”. Although Silvercorp has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such forward looking statements. Accordingly, readers should not place undue reliance on forward-looking statements. No securities regulatory authority has in any way passed on the merits of this presentation nor any securities referred herein. Cautionary Note to U.S. Investors concerning estimates of Measured, Indicated and Inferred Resources This presentation uses the terms “Measured”, “Indicated” and Inferred” Resources. U.S. investors are advised that while such terms are recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognize them. “Inferred Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that all or any part of Measured or Indicated Resources will ever be converted into reserves. U.S. investors are also cautioned not to assume that all or any part of an Inferred Resource exists, or is economically or legally mineable. 2SVM:TSX/NYSE AMERICAN
  3. 3. SVM:TSX/NYSE AMERICAN 3 Ying Mining District, Henan Province GC Mine, Guangdong Province CHINA’S PREMIER SILVER PRODUCER BYP Mine, Hunan Province (On Care and Maintenance) * Profit distribution from Ying Mining District Historical Production (April 2006 – March 2018) Silver: 57 Million Ounces Lead+Zinc: 834 Million lbs Profit Distribution*: US$380 million 15+ year mine life remaining
  4. 4. 57 MILLION OUNCES OF SILVER PRODUCED IN 12 YEARS SVM:TSX/NYSE AMERICAN 4 * Silvercorp’s fiscal year end is March 31 (5.1) (5.7) Red numbers in brackets are fiscal year’s guidance
  5. 5. 834 MILLION POUNDS OF LEAD AND ZINC PRODUCED IN 12 YEARS SVM:TSX/NYSE AMERICAN 5 * Silvercorp’s fiscal year end is March 31 (76.3) (81.4) Red numbers in brackets are fiscal year’s guidance
  6. 6. IMPROVED AND STEADY HEAD GRADES AT YING MINING DISTRICT SVM:TSX/NYSE AMERICAN 6 Dilution Control Improvement
  7. 7. FINANCIAL PERFORMANCE (VALUE & PROFIT OF PER TONNE ORE MINED) SVM:TSX/NYSE AMERICAN 7 * Realized silver price is calculated using Shanghai Metal Exchange price, less smelter charges, recovery, and 17% of value added tax. * Value added tax was reduced from 17% to 16% effective as of May 1, 2018. ▸ Cash + short-term investments: US$106.1M (as at Mar. 31, 2018) ▸ Dividend of US$0.02/share in fiscal 2018 ▸ No Receivables ▸ No Debt ▸ Invested US$23M in New Pacific Metals ▸ US$6.8M on share buyback since 2015 ▸ Paid US$3.4M dividend in fiscal 2018 PerTonneValue SilverPrice(us$perounce)
  8. 8. REVENUE PERCENTAGE BY METALS SVM:TSX/NYSE AMERICAN 8 ▸ GC Mine contributed to increased revenue for Lead and Zinc since Q3 2014 ▸ Lead and Zinc price increases boosted Lead and Zinc revenue percentage
  9. 9. QUARTERLY FREE CASH FLOW SVM:TSX/NYSE AMERICAN 9
  10. 10. QUARTERLY ADJUSTED NET INCOME (LOSS) SVM:TSX/NYSE AMERICAN 10
  11. 11. STEADY & REDUCED SHARES OUTSTANDING SVM:TSX/NYSE AMERICAN 11
  12. 12. COMPARISON WITH PEERS: FREE CASH FLOW PER SHARE AND MULTIPLES SVM:TSX/NYSE AMERICAN 12
  13. 13. COMPARISON WITH PEERS: ALL- IN SUSTAINING COST SVM:TSX/NYSE AMERICAN 13 * All-in sustaining cost per ounce of silver, net of by-product credits.
  14. 14. COMPARISON WITH PEERS: RETURN ON EQUITY SVM:TSX/NYSE AMERICAN 14
  15. 15. GROWTH: GROW SHARES OUTSTANDING OR FREE CASH FLOW? SVM:TSX/NYSE AMERICAN 15 • Free cash flow=operating cash flow less capital expenditures less capital lease payment • Silvercorp bought back 5,754,552 common shares of the Company since 2015 167.03M
  16. 16. GROWING RESERVES & RESOURCES - SILVER SVM:TSX/NYSE AMERICAN 16 2 Excludes Lead and Zinc. Gold was converted to Silver equivalent at a rate of 65:1. 1 Measured & Indicated Resources inclusive of Reserves. See Appendix III, IV and V for breakout of Measured, Indicated and Inferred, Proven and Probable categories.
  17. 17. GROWING RESERVES & RESOURCES - LEAD & ZINC SVM:TSX/NYSE AMERICAN 17 1 Measured & Indicated Resources inclusive of Reserves. See Appendix III, IV and V for breakout of Measured, Indicated and Inferred, Proven and Probable categories.
  18. 18. ADOPT NEW INFORMATION TOOL “ENTERPRISE BLOG” IN OPERATION Improvement in the head grades of metals can be attributed in part to an internal “Enterprise Blog” (EB) system in the management of Mine Production and Safety Information. “EB” is an intranet social media system that makes the collection, distribution and flow of the work related knowledge and information easy, transparent and in real time for parties at different locations. SVM:TSX/NYSE AMERICAN 18 REDUCES DILUTION, IMPROVES SAFETY AND PRODUCTION EFFICIENCY This supporting photo posted by frontline technician shows an inspected stope with clearly marked ore boundaries and drill hole locations. This supporting photo posted by an onsite technician clearly shows the CO reading for the stope is less thatn24 ppm as required by the government.
  19. 19. YING MINING DISTRICT IN HENAN: SILVERCORP’S FLAGSHIP ASSET SVM:TSX/NYSE AMERICAN 19 ▸ SGX, TLP, LME, LMW, HPG and HZG underground mines working over 200 veins within 68.74km² mining permits ▸ Two centralized mills of 3,200 t/d capacity to produce silver-lead and zinc concentrates ▸ 6 smelters within 200km ▸ Produced 54.8 million oz silver plus 758 million lbs of lead & zinc since 2006 ▸ Over 1.5 million metres of drilling yields 15+ years remaining mine life after 12 years’ production ▸ Opportunity for further acquisitions in local area * The Ying Mining District mines are held by Henan Found Mining Co. Ltd., owned 77.5% by Silvercorp SGX TLP HZG HPG LME LMW
  20. 20. GC MINE IN GUANGDONG: THE SECOND MINE Our Newest Mine ▸ Commercial production commenced in 2014 ▸ Underground silver/zinc mine ▸ Excellent infrastructure and access ▸ Profitable operations SVM:TSX/NYSE AMERICAN 20 Main Access Ramp
  21. 21. BYP GOLD MINE : PREPARING FOR PRODUCTION Status: ▸Suspended mining operations in August 2014 ▸Capital requirements for upgrades to sustain ongoing production are being considered ▸Continuing to review alternatives for this project ▸To bring the project back to production may cost US$10 million SVM:TSX/NYSE AMERICAN 21 500 tpd Mill at the BYP Mine
  22. 22. STEADY PRODUCTION AND COST CONTROL TO SUPPORT “QUALITY GROWTH” Current Production: ▸Maintain steady production, with stable or reduced cost Growth: ▸Grow existing assets organically through drilling ▸Bring BYP back to production ▸Acquired ~29.8% equity interest in New Pacific Metals Corp. (TSX-V:NUAG; OTCQX:NUPMF) ▸Acquire high grade exploration projects with defined resources that can quickly be brought into profitable operation with reasonable capital expenditures 22SVM:TSX/NYSE AMERICAN
  23. 23. COMPARISON WITH PEERS: KEY VALUATION RATIOS SVM:TSX/NYSE AMERICAN 23 * Stock prices were quoted as of March 31, 2018
  24. 24. COMPARISON WITH PEERS: KEY VALUATION RATIOS SVM:TSX/NYSE AMERICAN 24 * Stock prices were quoted as of March 31, 2018
  25. 25. METAL PRICES SVM:TSX/NYSE AMERICAN 25 Silver Price US$ Per Ounce Lead Price US$ Per Pound Zinc Price US$ Per Pound * Current price & Silvercorp Net Realized Selling Price as of May 22, 2018. * Realized selling prices are calculated using Shanghai Metal Exchange price, less smelter charges, recovery, and 16% of value added tax.
  26. 26. FY2019 PRODUCTION GUIDANCE 26SVM:TSX/NYSE AMERICAN * Estimated as per metal balance sheet Fiscal year end is March 31 F2019 Guidance F2018 Guidance F2018 Actual F2019 Guidance F2018 Guidance F2018 Actual F2019 Guidance F2018 Guidance F2018 Actual Ore (000' tonne) 630 650 614 250 250 246 880 900 860 Silver (gram/ tonne) 285 275 305 98 90 98 Lead (%) 4.3 4.2 4.4 1.6 1.5 1.5 Zinc (%) 0.9 0.9 0.9 3.0 2.6 2.8 Silver (million ounces) 5.4 5.3 5.5 0.6 0.4 0.6 6.0 5.7 6.0 Lead (million pounds) 56.1 56.0 56.7 7.5 7.1 6.7 63.6 63.1 63.4 Zinc (million pounds) 6.2 6.0 6.1 13.6 12.3 12.2 19.8 18.3 18.3 Cash production costs 75.4 66.8 75.0 57.2 46.1 53.2 70.2 61.0 68.7 123.7 114.0 122.0 75.5 58.6 70.0 122.2 109.0 119.0 Metal Production* Costs ($/ tonne of ore) AISCproduction costs YingMiningDistrict GCMine Consolidated Production and cash costs Head Grades
  27. 27. FY2019 CAPITAL EXPENDITURE GUIDANCE 27SVM:TSX/NYSE AMERICAN * For FY2019, total tunneling at Ying Mining District is budgeted at 83,000 meters, of which 66,000 meters will be capitalized and 17,000 meters will be expense * For FY2019, total tunneling at GC is budgeted at 16,000 meters, of which 1,000 meters will be capitalized and 15,000 meters will be expensed. Mine Development and Facilities Work (meters) Amount (US$ million) Work (meters) Amount (US$ million) Work (meters) Amount (US$ million) Tunneling* 66,000 18.8 1,000 0.6 67,000 19.4 Ramp development (4.2x3.8 meter in dimension) 4,000 4.4 1,000 0.8 5,000 5.2 Facilities and equipment - 8.6 - 1.3 - 9.9 Total Capital Expenditures 70,000 31.8 2,000 2.7 72,000 34.5 Tunneling* 17,000 3.9 15,000 3.8 32,000 7.7 Drilling 75,000 1.7 30,000 1.0 105,000 2.7 Ying Mining District GC Mine Consolidated Mine Development and Capitalized Amount Expensed Tunneling and Drilling
  28. 28. SVM:TSX/NYSE AMERICAN 28 Suite #1378 - 200 Granville St., Vancouver, BC, Canada V6C 1S4 Tel: 604-669-9397 Fax: 604-669-9387 Toll-Free: 1-888-224-1881 HEAD OFFICE Silvercorp’s disclosure documents are available from the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com SVM:TSX/NYSE AMERICAN investor@silvercorp.ca www.silvercorp.ca
  29. 29. APPENDICES SVM:TSX/NYSE AMERICAN 29
  30. 30. APPENDIX I: SVM:TSX/NYSE AMERICAN 30 OWNERSHIP AND COVERAGE Ownership Top 10 Institutional Investors % O/S 1 Van Eck Associates Corporation 7.93 2 Old Mutual Global Investors (UK), LTD 3.11 3 Global X Management Company, 1.41 4 DZ Privatbank S.A. 1.35 5 Stabilitas GmbH 1.19 6 Goldman Sachs Asset Management International 1.05 7 Marshall Wace North America, L.P. 0.92 8 Morgan Stanley Canada, LTD 0.90 9 Sprott Asset Management, L.P. 0.86 10 AMG Fondsverwaltung AG 0.83 Source: BD Corporate May 2018 Data Joe Reagor Roth Capital Bhakti Pavani Euro Pacific Analyst Coverage Under Review Raymond James Institutio ns 31% Insiders 4% Retail Investors 65% Ryan Thompson BMO Capital Markets
  31. 31. APPENDIX II SVM:TSX/NYSE AMERICAN 31 MANAGEMENT & BOARD Management Rui Feng, Ph.D., Geology Chairman and CEO, Director Derek Liu, MBA, CGA, CPA Chief Financial Officer Luke Liu, M. Eng. PhD (Mining Eng.) Vice President China Operations Lorne Waldman, MBA, LL.B. Senior Vice President Board of Directors Rui Feng Marina Katusa Yikang Liu Paul Simpson David Kong
  32. 32. APPENDIX III: SVM:TSX/NYSE AMERICAN 32 SUMMARY OF RESERVES1 Project Reserve Category Tonnes (Million) Average Grades Contained Metal Reserves Silver (g/t) Lead (%) Gold (g/t) Zinc (%) Silver (Moz) Silver² Eq. (Moz) Lead (t) Zinc (t) Ying Mining District Proven 4.67 252 4.15 0.11 1.55 37.85 1.07 193,950 72,240 Probable 7.63 233 3.50 0.04 1.09 57.16 0.7 267,010 83,450 GC Mine Proven 0.46 199 1.12 3.18 3.00 5,200 14,800 Probable 4.29 113 1.33 2.93 15.50 56,900 125,500 Consolidate d Proven 5.13 40.85 1.07 199,150 87,040 Probable 11.92 72.66 0.7 323,910 208,950 Total 17.05 113.51 1.77 523,060 295,990 1. Table includes HPG mine proven reserves of 16,430 oz Gold (470,000 tonnes grading 1.10 g/t Gold) and HPG mine probable reserves of 10,840 oz Gold (290,000 tonnes grading 1.15 g/t Gold) 2. Gold was converted to Silver equivalent at a rate of 65:1.
  33. 33. APPENDIX IV: SVM:TSX/NYSE AMERICAN 33 SUMMARY OF RESOURCES1 Project Resource Category Tonnes (Million) Average Grades Contained Metal Resources (Inclusive of Reserves) Silver (g/t) Gold (g/t) Lead (%) Zinc (%) Silver (Moz) Silver Eq.² (Moz) Lead (t) Zinc (t) Ying Mining District Measure d 5.91 266 0.13 4.36 1.64 50.55 1.56 257,600 96,690 Indicated 10.40 233 0.07 3.59 1.13 77.76 1.43 373,000 117,660 Inferred 10.47 230 0.12 3.91 1.10 77.25 2.54 409,400 115,220 GC Mine Measure d 0.59 230 1.41 3.33 4.40 8,400 19,800 Indicated 7.04 113 1.31 3.06 25.60 92,500 215,500 Inferred 7.96 123 1.41 2.66 31.40 112,500 211,900 BYP Mine Indicated 2.59 1.16 2.52 18.98 85,000 184,700 Inferred 1.84 0.85 2.75 9.49 64,200 207,600 Consolidate d Measure d 6.50 54.95 1.56 266,000 116,490 Indicate d 17.44 103.36 20.41 550,500 517,860 Inferred 18.43 108.65 12.03 586,100 534,700 1. Table includes HPG mine measured resources of 24,000 oz Gold (690,000 tonnes grading 1.10 g/t Gold), indicated resources of 22,000 oz Gold (630,000 tonnes grading 1.10 g/t Gold), inferred resources of 39,000 oz Gold (1,010,000 tonnes grading 1.21 g/t Gold). Table also includes BYP mine resources. 2. Gold was converted to Silver equivalent at a rate of 65:1.
  34. 34. APPENDIX V: SVM:TSX/NYSE AMERICAN 34 BYP MINE RESOURCE CLASS Cut-off Grades (g/t) Resource Grades Contained Metal Resources Tonnes (Million) Gold (g/t) Gold (oz) Indicated 1.0 3.51 2.59 292,000 Inferred 1.0 2.47 1.84 146,000 Mineral Resources for Gold Zones: CLASS Cut-off Grades (%) Resource Grades Contained Metal Resources Tonnes (Million) Lead (%) Zinc (%) Lead (Tonnes) Zinc (Tonnes) Indicated 2.0 Lead+Zinc 7.33 1.16 2.52 85,000 184,700 Inferred 2.0 Lead+Zinc 7.55 0.85 2.75 64,200 207,600 Mineral Resources for Lead and Zinc Zones: Notes to Resource Tables: 1. Resources as of December 31, 2011 2. Technical report filed on August 16, 2012 at www.sedar.com
  35. 35. ENDNOTES AND CAUTIONARY STATEMENTS Guoliang Ma, P. Geo., is the Qualified Person within the meaning of National Instrument 43-101 – Standards Of Disclosure for Mineral Projects (“NI 43-101”) who supervised the preparation of the scientific and technical information of Silvercorp included in this presentation. For more information on Silvercorp’s projects, readers should refer to Silvercorp’s Annual Information Form, dated June 16, 2017, and its technical reports, each of which is available on SEDAR at www.sedar.com. The scientific and technical information related to Silvercorp’s projects included in this investor presentation are derived from the technical reports entitled: - NI 43-101 Technical Report for Ying Gold-Silver-Lead-Zinc Property, Henan Province, China, effective date 31 December, 2016 by P R Stephenson, P. Geo., H A Smith, P.Eng., A Ross, P. Geo, H Muller, Beng, MAusIMM, CP - Technical Report for BYP Gold-Lead-Zinc Property, Hunan Province, China, effective date 30 June, 2012, prepared by P R Stephenson, P. Geo., H A Smith, P.Eng., A Riles, MAIG, M Molavi, P.Eng, D. Nussipakynova, P.Geo., A. Ross, P.Geo. - NI 43-101 Technical Report on the GC Ag-Zn-Pb Project in Guangdong Province, People’s Republic of China, effective date 23 January, 2012, prepared by Brian O’Connor, P. Geo, Peter Mokos, MAusIMM (CP), Alan Riles, MAIG, Owen Watson, MAusIMM (CP), Mo Molavi, P. Eng, Patrick Stephenson, P. Geo, AMC Mining Consultants (Canada) Ltd. 35SVM:TSX/NYSE AMERICAN

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