Vancouver-based Silvercorp Metals Inc. (TSX:SVM) plans to acquire a 70% stake in a gold-lead-zinc mine in Hunan province for US$33 million.
It has signed a share purchase agreement and a Sino-Foreign co-operative joint venture contract to acquire its stake in Yunxiang Mining Co. Ltd., a local, private mining company with operations located 220 kilometres southwest of Changsha, Hunan’s capital city.
The acquisition is part of Silvercorp’s plans to establish a third production base in China. It plans to use the mine’s existing facilities to process gold, starting in fiscal 2012, and expand the mine’s capacity in 2013 and 2014.
The deal is expected to close before March 31, 2011, subject to the necessary regulatory approvals, including Chinese military clearance.
Silvercorp reported sales of $36.7 million for its first quarter ending June 30, up from $22.6 million in the same period in 2009. Net profit for the quarter rose to $14.1 million from $7.5 million from sales of 1.4 million ounces of silver, 18.8 million pounds of lead and 4.4 million pounds of zinc.
Silvercorp’s share price range during the past week: between $10.07 and $12.73; 52-week high: $12.82; 52-week low: $5.10.