Silver Dragon Completes Feasibility Study for Erbahuo Polymetallic Project


BEIJING, April 7, 2009 (GLOBE NEWSWIRE) -- Silver Dragon Resources Inc. (OTCBB:SDRG) is pleased to announce receipt of a comprehensive feasibility study with respect to the potential development of its Erbahuo polymetallic project (Silver/Lead/Zinc/Copper/Manganese) into a producing property. The study was prepared and submitted by Beijing Tenstar Technology Ltd. of Beijing, China.

The Erbahuo mine is 70% owned by Silver Dragon and 30% by Chinese corporations led by Huaguan Industrial Corp. ("HIC"), Silver Dragon's state-owned Chinese joint venture partner.

The feasibility study recommends that the Company contract a third party workforce to implement and operate a level adit development with a long stope mining method for the first two years of its operation. The development will focus on ore bodies II, III, and IV, which account for a total minable resource of approximately 68 metric tonnes (3,150,775 troy ounces) of silver with a projected recovery rate of 90 percent. Mining dilution is expected to be within 15% tolerance. Distance between levels is 30 meters, with three levels to be built up in three phases.

According to the mining license, mining capacity is 30,000 tonnes of ore per year. The designed capacity of the operation will be 150 tonnes per day initially, which amount is expected to increase as the project begins to generate revenues. These calculations reflect only silver. In addition to silver, there are 290,000 metric tonnes of polymetallic ore, comprised of lead, zinc, copper, and manganese, which will also be processed. Further, there are small quantities of gold present in the ore bodies, which too will be processed. The study projects that the breakeven silver price for this project is approximately US $11.00/ounce, excluding byproduct credits.

Total start-up costs for the project are estimated at 32.5 million RMB or US $4.7 million. The Company initially plans to advance 60% of this amount via its Chinese subsidiary, Chifeng Silver Dragon Resources & Technologies, Ltd., and finance the remaining 40% with local Chinese financial institutions (40% is the maximum amount which can be financed according to foreign investment regulations). Total labor costs are estimated at 2 million RMB or US $286,000 per year.

Cash flow from the property is expected to fund other operations as well as further exploration initiatives at the Company's nine (9) Chinese properties.

"We are extremely pleased with the results of the Erbahuo silver mine feasibility study," commented Mr. Marc Hazout, President of Silver Dragon Resources Inc. "This study, along with the completion of the mining license transfer (see press release dated February 24, 2009) are significant steps in monetizing this asset in China."

About Beijing Tenstar Technology, Ltd.

Beijing Tenstar Technology Ltd. is a Chinese project management and consulting service provider that is based in Beijing. The Ten-Star consulting team has significant experience in the mining project development all over China and the Asian region. The team consists of experts in project management, process engineering, mineral process mining, civil engineering and construction, mechanical engineering, etc. The team leader is Mr. Xu Hao, who has six years experience in the metallurgical industry and 13 years experience in the mining industry in China, Australia and the Pacific Islands, covering a broad range of areas including study management, project management, engineering coordination and equipment manufacturing management. He served as deputy project manager of the Jinfeng Gold project - the largest Biox acid plant in the world and the largest Gold plant in China, and was involved in engineering, procurement management and overall project coordination. He has specialist expertise in hydrometallurgical extraction processes, including alumina refining, cobalt, nickel, manganese, vanadium and titanium. Mr. Xu and his team are well acquainted with Silver Dragon's Erbahuo property through their involvement in a status evaluation study project commissioned by Silver Dragon to Ausenco Ltd. in January, 2007.

About Erbahuo Silver Mine

Erbahuo silver mine covers an area of 1.2 square kilometers. It is located 120 kilometers northwest of the city of Chifeng, which is 450 kilometers northeast of Beijing, China and comprises the Erbahuo mining district, part of the prolific silver belt on the structural join where the north edge of the North China platform meets with the south edge of the Hercynian fold belt of the Great Xingan Mountains. The deposit is a shear zone hosted and stratabound volcanogenic hydrothermal system of parallel trending and dipping mineralization containing pyrolusite, psilomelane, limonite, pyrite, galena, sphalerite, chalcopyrite, and other silver related mineralization. Silver is concentrated within manganese oxides. Erbahuo used to be considered a silver manganese mine in a fracture zone. In recent years, however, the features of strata bound Ag deposits have been discovered, suggesting the potential for significant further resources in sulfides that contain silver, copper, molybdenum and other metals.

An NI43-101 technical report on this property was completed in July, 2007, by Micromine Consulting ("Micromine"), a resource sector software developer and consulting company headquartered in Perth, Australia. The Erbahuo silver mine is wholly-owned by Sanhe Sino-Top Resources & Technologies Ltd. ("Sino-Top"), a Chinese company of which Silver Dragon currently owns 40% as per the equity transfer agreement with Huaguan Industrial Corp. (see press release of July 14, 2008). Under the same agreement, however, Erbahuo Silver Mine will be spun off from Sino-Top and be put under a separate entity, i.e. Chifeng Silver Dragon Resources & Technologies, Ltd. ("Chifeng Silver"), an American-Chinese joint venture that will be 70% owned by Silver Dragon upon completion of the relevant government approval process.

About Silver Dragon Resources Inc.:

Silver Dragon Resources Inc. is a mining and metal company focused on the exploration, acquisition, development and operation of silver mines in proven silver districts globally. Silver Dragon's objective is to acquire silver mining assets that contain promising exploration targets, have highly leveraged, out-of-the-money silver deposits, and/or are producing properties with significant untapped exploration potential. It is management's objective to grow Silver Dragon into a significant silver producer by developing the Cerro las Minitas and Erbahuo projects in Mexico and China respectively. For more information, please visit the Company's website at: www.silverdragonresources.com (now available in Chinese).

The Silver Dragon Resources Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4242

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained herein which are not historical, such as statements regarding the exploration and development of the Erbahuo Silver Project, production timelines, outcome and timing for the completion of further assays and metal amounts in partial assay results, are forward-looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "plans," "anticipates," "believes," "intends," "estimates," "projects," "aims," "potential," "goal," "objective," "prospective," and similar expressions, or that events or conditions "will," "would," "may," "can," "could" or "should" occur. Information inferred from the interpretation of assay results and information concerning mineralized zones may also be deemed to be forward looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, certain delays beyond the company's control with respect to future assay results, delays in testing and evaluation of assays, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.



            

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