TORONTO, July 18, 2007 (PRIME NEWSWIRE) -- Silver Dragon Resources Inc. (OTCBB:SDRG) ("Silver Dragon") today announced the incorporation, under the laws of China, of Chifeng Silver Dragon Resources & Technologies, Ltd. ("Chifeng Silver") as a wholly-owned subsidiary of Sanhe Sino-Top Resources & Technologies, Ltd.("Sino-Top"). Silver Dragon owns a 90% equity interest in Sino-Top, a Chinese company which holds the exploration and mining rights to nine properties including the Erbahuo Silver Mine located in the Erbahuo Silver District in Northern China.
Chifeng Silver is headquartered in Wengniute County, Chifeng City, Inner Mongolia. Chifeng City, from which Chifeng Silver's name is derived, has jurisdiction over a vast area of more than 90,000 square kilometers populated by 4.5 million Chinese, 20% of whom are ethnic minorities dominated by the Mongolian ethnic group. The area surrounding Chifeng, which literally means "Red Peaks," is geologically favored by a tectonic setting that provides a dynamic geologic environment for the development of mineralizing systems. This area is where Sino-Top holds exclusive exploration rights to eight properties and mining rights to the Erbahuo silver mine, collectively covering a total area of 261.25 square kilometers.
The incorporation of Chifeng Silver marks an important stage in the development of the Sino-Top properties including the Erbahuo silver mine. As the first Chinese company with the trade name Silver Dragon, Chifeng Silver will hold the new mining license (if and when issued) for, and be responsible for the development of, the Erbahuo silver mine. In the future, Chifeng Silver intends to incorporate its own subsidiary in the neighboring county of Keshiketeng, where Sino-Top's eight other properties are located, in order to eventually develop all such properties into producing mines. The incorporation of Chifeng Silver, and its Keshiketeng subsidiary in the future, is legally necessary to maintain compliance with the local government's requirements for mining and sales of mineral products.
Chifeng Silver has the following objectives throughout the next few years:
1. By the end of 2007, Chifeng Silver intends to obtain a new mining license to the Erbahuo silver mine and become an established mining and mineral product sales company. The current mining license allows for limited mining and is under the name of Silver Dragon's joint venture partner Huaguan Industrial Corp., which is now assisting Sino-Top and Chifeng Silver with upgrading the license for full capacity mining and transferring the license to Chifeng Silver. For the legal and ownership status and resource estimation of Erbahuo silver mine, please refer to the report completed by Micromine Pty. Ltd. and Ausenco Beijing Ltd. under National Instrument 43-101 of the Canadian Securities Administrators filed with the Securities and Exchange Commission at www.sec.gov.
2. Chifeng Silver intends to build a 300tpd mill to process silver ore from the Erbahuo silver mine. The feasibility study for this construction is currently underway. The construction of the mill and the mining facilities will commence upon receipt of government approval of the feasibility report.
3. At an appropriate time in the future, Chifeng Silver intends to upgrade the milling capacity from 300tpd to 500tpd. While numerous small non-ferrous metals mines in the vicinity also produce silver ore, there is no dedicated silver mill to serve the area. Once the Erbahuo mill is built, it will be able to process not only ore from the Erbahuo silver mine but also silver-containing ores from surrounding mines. When there is enough ore to feed the mill, the capacity will be increased to 500tpd.
4. Within the next several years, Chifeng Silver intends to expand by purchasing or merging two or three small mines near the Erbahuo silver mine with relatively low operating costs. The local government has recently formulated policies that encourage mining consolidation to enhance the exploitation of mineral resources and environmental protection. It is believed that the new acquisitions will bring additional mineable reserves as well as additional exploration targets for Sino-Top.
5. If Sino-Top identifies further mineable reserves in its eight properties in Keshiketeng County, Chifeng Silver intends to establish a subsidiary there to put these properties sequentially into production. Currently Sino-Top is focusing its exploration effort on Laopandao, the most promising of the eight properties, and hopes to obtain a mining license to the property within two years.
About Silver Dragon
Silver Dragon 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 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 the Erbahuo projects in Mexico and China. For more information, please visit the Company's website at: www.silverdragonresources.com (now available in Chinese).
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements contained in this news release that are not historical fact, such as statements regarding the economic prospects of the company's projects, future plans or future revenues, future exploration plans and prospects, timing of development or potential expansion or improvements, and similar statements, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from estimates. Such risks and uncertainties include, but are not limited to, the company's ability to raise sufficient capital to fund development, changes in economic conditions or financial markets, changes in prices for the company's mineral products or increases in input costs, litigation, legislative, environmental and other judicial, regulatory, political and competitive developments in China and Mexico, technological and operational difficulties or inability to obtain permits encountered in connection with exploration and development activities, labor relations matters, and changing foreign exchange rates, all of which are described more fully in the company's filings with the Securities and Exchange Commission.