Canada Research

Published by Raymond James Ltd

Silvercorp Metals Inc.
SVM-NYSE | SVM.T-TSX
Brad Humphrey | 416.777.4917 | brad.humphrey@raymondjames.ca Phil Russo (Associate) | 416.777.7084 | phil.russo@raymondjames.ca Tracy Reynolds (Associate) | 416.777.7042 | tracy.reynolds@raymondjames.ca
Rating & Target Target Price (6-12 mos): Current Price ( Sep-13-11 ) Total Return to Target 52-Week Range Market Data Market Capitalization (mln) Current Net Debt (mln) Enterprise Value (mln) Shares Outstanding (mln, f.d.) Average Daily Volume (000s) Dividend/Yield Key Financial Metrics 2011A P/E 25.0x P/NAV Ag Price (US$/oz) Old US$23.96 New US$23.96 Ag Production (mln oz) Old 5.0 New 5.0 Ag Cash Cost (US$/oz) Old US$(6.59) New US$(6.59) CFPS Old US$0.55 New US$0.55 P/CFPS 18.7x EBITDA (mln) Old US$97 New US$97 EV/EBITDA 16.1x

September 14, 2011 Company Comment
Outperform 2 US$16.00 US$6.30 154% US$16.32 - US$6.45 US$1,103 -US$230 US$872 175.0 3,439 US$0.08/1.3%

Precious Metals | Silver

Weathering the Storm Event
Silvercorp was the subject of a second report, this one from a website called Alfredlittle.com. This report accused the company of several additional fraudulent issues and rehashed some old ones. This follows the earlier allegation of accounting fraud from an Anonymous Letter directed at the company on Sep-2-11. Please refer to our previous Company Comment (“Under Attack”, price $7.53, dated Sep-6-11) for our view on those allegations.

2012E 11.0x 0.7x US$39.79 US$39.79 5.6 5.6 US$(6.58) US$(6.15) US$0.91 US$0.90 7.0x US$163 US$161 5.4x

2013E 10.8x 0.0x US$37.63 US$37.63 6.4 6.4 US$(5.57) US$(5.57) US$0.88 US$0.88 7.2x US$173 US$173 5.1x

Action
We reiterate our Outperform rating and 12-month target price of $16. The continued allegations, of course, add to the uncertainty already surrounding companies, such as Silvercorp, with Chinese assets. These reports appear, to us, to be opportunistic and in the short-term are driving the share price weakness. Given what we know at this time, we suspect SVM will weather this storm and suggest that the company continue to move forward with its operations and development projects, focusing on its strong margins and cash flow, which will ultimately lead to an outperformance. We will continue to watch any new developments closely.

Analysis
We continue to view these allegations as unfortunate and opportunistic. We also maintain our view that the SGX mine is a high quality asset that has been and should continue to generate positive returns at current and much lower metal prices for many years to come. We also believe when you cut through all of the noise it really comes down to the fact that since 2004 the company has raised just over $200 mln, paid some $40 mln in dividends, ~$30 mln in share buybacks, spent more than $175 mln acquiring, developing, expanding and exploring (both in China and Canada) and still have roughly $220 mln in the bank. This, along with our site visits and the VAT receipts give us the comfort we need to maintain our view.

Valuation
We apply a 1.8x multiple to our $9.22 NAVPS estimate, largely based on the high grade, low cost Ying mine. SVM is currently trading at a P/NAV of 0.7x vs. the peer group at 1.1x.
EPS 1Q 2Q Mar Jun 2011A US$0.09 US$0.07 2012E 0.16A 0.15 2012E 0.16A 0.14 2013E 0.15 0.15 2013E 0.15 0.15 3Q Sep US$0.13 0.17 0.16 0.15 0.15 4Q Dec US$0.08 0.12 0.12 0.14 0.14 Full Year US$0.37 0.59 0.59 0.58 0.58 Revenue (mln) US$176 279 276 293 293 NAV

Company Description Silvercorp is a producer, developer and explorer focused on silver assets in China (albeit with significant by-products). The company's key producing asset is the high-grade SGX Silver project.

Old New Old New

9.22 9.22 NA NA

Source: Raymond James Ltd., Thomson One. Fiscal Year End March 31st . Fiscal years ending before May are treated as previous year.

Please read domestic and foreign disclosure/risk information beginning on page 8 and Analyst Certification on page 9.
Raymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 2 of 13

Silvercorp Metals Inc.

Fresh Accusations
As we stated in our previous Company Comment published on September 6 entitled “Under Attack”, outsiders can never state with absolute certainty that something is not a fraud, this is why such allegations are particularly challenging to refute. This still holds true. It is unfortunate that in today’s current market environment companies appear to be guilty before proven innocent. Before we dive into the fresh slate of allegations against Silvercorp we wanted to review our thoughts again, and break down what it is that continues to, at the end of the day, give us comfort to maintain our Outperform rating and $16.00 12-month target price. First, as with every company we cover, we perform a certain amount of due diligence; it varies slightly from company to company - reviewing the assets, disclosures, management meetings, third party studies, etc. Often we visit the assets several times, we focus on permitting and various other asset or region specific issues or risks. Once all of this is complete, we decide whether or not to officially cover the company’s shares. In the case of Silvercorp, we went through our typical procedure, gaining comfort that yes, the assets exist, have good potential and that we trust management. In mining there are a number of aspects where we need to rely on, our experience, third party reports and management, which is why trusting management is truly a key feature in our analysis. We need to trust not only that they are truthful but also that they can actually accomplish successfully, what we believe is the potential of the various assets to be. What are the key issues when reviewing a mining company (after establishing a level of good faith with management to be truthful and are competent)?   1. Quality of an asset, i.e. grades, widths, size, mine life, etc. 2. Economics of an asset, i.e., can the asset generate positive cash flow sustainably?

Quality of the Asset Once we have established this trust, we then focus, in more detail, on the specifics of the asset, whether in the exploration, development or production phase and then decide whether it is under, over or fairly valued in the market. When we first started to review Silvercorp it was in the exploration/development stage, quickly moving to the production stage. Once in production, and through the typical ramp up issues that all mining companies grind through, we are better able to re-assess whether or not the asset is actually economic and have a much better idea if our original assessment, as to the ultimate potential of the asset, still holds. We focused on SGX, as it was and still is Silvercorp’s key asset. The issue for us with the SGX mine was not whether it was high grade or if it was likely going to be in operation for several decades - we have been to the mine several times and believe both to be true - our concern was whether or not, given its narrow widths, it could be mined economically. Now of course our original work was done in a much lower metal price environment and given today’s prices we would likely have focused a little less on this, however given these recent events, we are glad we did. Initially Silvercorp did have some challenges with the mining methods, and dilution rates were quite high. After a lot of test work and training the company was able to develop a method that maximized the grade mined by minimizing the dilution. We visited the mine both before this was put in place and afterward. So given we believe the asset to be high grade and believe it has a long future ahead of it, albeit will always be a relatively small mine, we were now able to gain comfort that it could in fact be mined economically.
Raymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Silvercorp Metals Inc. We are not necessarily overly concerned about the allegations regarding the currently reported size of the asset or its grades (we will touch on this later); as we know, consultants and geologists can take the same information and depending on cutoffs, mining widths (dilution) and several other inputs can come up with a variety of results. In fact, the reported grade in the NI 43-101 report is often not the grade actually mined. When a company lays out its mining blocks it takes into account current metal prices and costs and adjusts its plans accordingly. If the prices are high, it can mine lower grade zones, if the prices are low it can focus on higher grade areas. It can even focus on specific metals that might be trading at higher levels, if for example lead prices are elevated a company may choose to mine a zone that has a high lead grade but a lower silver grade. On the size of an asset, investors in companies with high grade narrow vein style deposits need to be comfortable with the fact that it is far too expensive and in some cases difficult to prove up an entire deposit. History is full of examples of mines that have been in operation for multiple decades with no more than 5 years of proven reserves at any one point in time. Economics Some would assume the quality of an asset goes hand in hand with its economics. Sometimes this is true, but not always. A high grade asset can be uneconomic for any number of reasons. So this is always a key determinant when reviewing a company’s assets. There are a number of ways to look at it, the old back of the envelope method where you take the current metal prices, the reported grades and calculate what a tonne of rock is worth and compare that to what you believe the cost per tonne will be. Or you can build full DCF valuations (as we do). Or, and likely the most accurate way, is to analyze whether or not the company is generating positive cash flow. Yes, so here again we are required to review our view of management. And again, we believe the company provided bank statements and financials to be accurate. Silvercorp did make this analysis slightly easier by providing a lot of back up documentation, which for us, the VAT receipts from concentrate sales and its current bank statements were the key. Accountants can argue the validity of different accounting treatments all day long, but as long as sales of concentrate are being made and cash balances are growing, assets are generating cash. We review in more detail cash inflows and outflows in Appendix A. Our Take in Short We continue to view these allegations as unfortunate and opportunistic. We also maintain our view that the Ying property and more specifically the SGX mine is a high quality asset that should generate positive returns at current and much lower metal prices for many years to come. We also believe when you cut through all of the noise, related to the quality of the asset or whether it is economic, it really comes down to the fact that since 2004 the company has raised just over $200 mln, paid some $40 mln in dividends, ~$30 mln in share buybacks, spent more than $175 mln acquiring, developing, expanding and exploring (both in China and Canada) and still have roughly $220 mln in the bank (according to current bank statements – note if you don’t believe the Chinese bank statements they hold roughly $90 mln outside of China). This, along with our site visits and the VAT receipts give us the comfort we need to maintain our view.

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Raymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2

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Silvercorp Metals Inc.

New Allegations
As mentioned, there were new allegations provided in a report from Alfredlittle.com which we summarized below along with our thoughts. Admittedly we are still working through some of details but here is what we have at this time.  “Henan Provincial Land & Resource Bureau mining reports contradict the production, quality and resource estimates of SVM’s key SGX (Ying) mine as shown in its 40-F and independent NI 43-101 reports that rely heavily upon data provided by management. No independent geologists have visited SVM’s SGX mine since 2008.” There are several allegations made within this statement; we focus on a few below. The author quotes the Henan Provincial Land & Resource Bureau (L&R) throughout the report. We have not yet been able to confirm or deny the accuracy of this data and more importantly what the methodology is behind the data. But going under the assumption that the L&R statements could be correct, there could be any number of reasons for the differences between the tonnes reported in Silvercorp’s NI43-101 and the L&R’s statements. We do not know if the L&R statements include material from the same area or a subset of it and we do not know what the different standards or requirements are, (and we will continue to look into it), but at this time on its face value, this is not something that we are concerned about. On the different grade calculations; again we do not have the official statements, however we do know that in China there tends to be a standard cutoff that is applied to various metals and deposit types. Although we are still attempting to confirm this, it is our understanding (through various conversations) that the SGX deposit type and style is required to use roughly a 50g/t cutoff in the L&R filings, versus Silvercorp’s current NI43-101 which is based on a 300+g/t cutoff. This in itself could potentially account for the difference in grade calculations. But there are a number of other determinants and required standards that could also lead to differences in grade. Regardless of what grade is reported in the statements, the grade that counts is the one that is in the mine plan and ultimately mined. We know each quarter what grade was actually mined to generate revenue and Silvercorp further supported this by providing 2010’s VAT receipts and by showing their increasing cash balances. The author also claimed to have counted trucks for two weeks and by their calculation Silvercorp should have had 63 trucks per day. However by their count there were only 44 trucks per day. First, in our view, this is not an accurate way to figure out tonnage and throughput. Yes, they are 30tonne trucks, but we would suggest it is highly likely that the trucks are regularly overloaded and note that 30 tonnes of lead ore likely would not fill a typical 30 tonne truck box. The trucks pictured in the report are full, suggesting that there was something more than 30 tonnes in each truck. Regardless, over a two week period it is not possible to prorate to a full quarter or full year, there are any number of reasons why one day tonnage would be higher or lower than the next, and these loads do not count the material that is direct shipped to the refiners or that is potentially stockpiled at the mill. As for the independent consultant that authored the NI43-101, we believe none of the issues stated are really that uncommon for a typical producing asset. If the company reported a wild increase in ounces year over year we may flag it, but we are not concerned at this point. We are curious however, who the independent consultants quoted in the report are, and would like to have been able to discuss some of these issues with them but their identity is also unknown at this time.

Raymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Silvercorp Metals Inc. The author also states “The SGX mine has calculated reserves that are only 68M Oz of equivalent silver. This is worrisome for a 100M market cap company let alone a $1,000M market cap company. They should have more resources.” SGX does have more resources. Possibly just an oversight, but the author neglected to mention that SGX also has an additional 182Moz (silver equivalent) in global resources as per their May 2011 NI 43-101 technical report. The last point in of this allegation that we are going to discuss at this time relates to their inference that narrow vein mines tend to require a higher amount of sustaining capital. This can be correct, especially for underground operations versus open pit. That said, the author went on and listed what it believes the sustaining capital figures of a number of Silvercorp’s peers are and stated that Silvercorp’s sustaining capital is the highest at US$436 mln. We are unable to recreate any of the numbers in the authors chart and although the author claims the number for Silvercorp is from its NI43-101, we were not able to calculate anything close to it. From our review we get roughly $44 mln in sustaining capital estimated over the LOM for SGX.  “Outside Tests of Ore Obtained from the SGX Mine Reveal Low Silver Content.” We will not dwell on this point much, but in our view gathering ore that has fallen off the back of a haul truck and having it assayed cannot be used to infer anything other than what the assays are of the rocks collected off the road. The author states that their own independent testing from a local laboratory determined the silver content to be only 30 g/t (from 2 samples we assume 2 rocks?). The author does not know where the material is from, and the high grade material is hand cobbed onsite and shipped directly to the smelter (by-passing the mill altogether).  “98% of Henan Found’s Sales Growth in 2010 came from Two Questionable Customers. Management Failed to Disclose SVM’s Largest Customer is a Related Party.” We are not entirely clear about what the issue is here, Silvercorp does own a 15% non-controlling interest in the Luoyang Yongning Smelter, this ownership was previously disclosed and when Silvercorp first announced its participation in this smelter project it stated as a reason for its participation was to try and improve the prices it was getting for its concentrate (as a side note we visited this smelter in 2009). This is by no means uncommon, particularly in base metals; in fact a recent trend in the zinc sector is for smelters to acquire mines and mining companies. In the end, all that concerns us is that Silvercorp’s assets produce a product and then sell that product generating positive cash flow. This is shown by the VAT receipts and its expanding cash balance.  Recent Auction Sale of 5% of Henan Found Values it at a 90% Discount to SVM’s Market Value. We refuted this claim in detail in our previous Company Comment. We would only add that it is incorrect to say that if it was worth more than the roughly $7 mln it was transferred at (5% of book value) someone else would have bid for it, because Silvercorp holds a right of first refusal on any sale other than to an affiliate and would have, we suspect, jumped at the chance to acquire the additional interest if it was truly for sale.  “SVM Acquired Yangtze Gold from Chairman Rui Feng’s Relative Giving Him a 1500% Gain in Six Months.” In April 2008, Silvercorp did complete a transaction to acquire Yangtze Gold Ltd., a private company for cash (40%) and equity (60%) totaling $61.95 mln. The equity

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Raymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 6 of 13 portion of the transaction was issued at a closing price of $8.20 per share for a total of 4.5 mln shares. Prior to the transaction, an independent NI 43-101 technical report completed by SRK Consulting China Ltd. dated January 2008, reported a measured and indicated resource for the GC Permit (owned by Yangtze Gold Ltd.), of 1,829,700 tonnes grading 129g/t silver, 1.45% lead, 2.79% zinc and 0.14% zinc and inferred resources of 7,381,300 tonnes grading 125g/t silver, 1.38% lead, 3.00% zinc and 0.13% tin. While the transaction was indeed with a relative of Mr. Feng’s (his father), this was disclosed and the transaction was approved by the independent directors of Silvercorp in accordance with applicable regulations. A fairness opinion was also given at the time as being in line with previous transaction of that type and nature. Our analysis of the value of the transaction also suggests that the value was reasonable for that period. Since this time, the silver price has increased some 100% and Silvercorp has proven up an additional ~20Moz of measured and indicated resources. This asset will soon be Silvercorp’s next leg up in production and it cost just $62 mln to acquire and is expected to cost around $30-40mln in initial capital to construct. We do not believe that Silvercorp shareholders should feel this was a poor acquisition (we have also visited the GC project).

Silvercorp Metals Inc.

Investigation by the BCSC
We note that the British Columbia Securities Commission (BCSC) announced their intention to investigate the allegations made previously against Silvercorp and that it is seeking out the identity of the Anonymous writer. It is common practice for these types of investigations to be kept confidential but given the allegations have been made anonymously, BCSC have made public their decision in the hope the author comes forward. We view any investigation from the BCSC as positive given the circumstances, and hope that it positions the company to have them eventually exonerated of any wrongdoing and remove the overhang on the company’s share price caused by the events of the recent weeks.

Valuation
We continue to suspect that this will be a short-term event and are maintaining our current Outperform rating and 12-month target price of $16. We will continue to watch any new developments closely. We apply a 1.8x multiple to our $9.22 NAVPS estimate, largely based on the high grade, low cost Ying mine. Silvercorp is currently trading at a P/NAV of 0.7x vs. the primary silver producer group at 1.1x. Exhibit 2: Silvercorp NAV Estimate Summary
Mining Assets SGX Mine Other Assets Investments Total Mining Assets Other Assets Total NAV 753.1 699.2 36.4 1488.7 150.6 1639.4 4.23 3.93 0.20 8.37 0.85 9.22

Source: Company Reports, Raymond James Ltd.

Raymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Silvercorp Metals Inc.

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Appendix A
Silvercorp's Historical Cash Flow Statement from 2006 to 2011 (in US$mln)
Cash Flow Statement CASH FLOWS FROM OPERATING ACTIVITIES: Net Gain (loss) Add (deduct) noncash items: Accretion of asset retirement obligations Equity income (loss) Future income tax Gain on disposal of subsidiary Non-cash other income Loss on disposal of mineral properties Stock-based compensation Non-controlling interest Depreciation Other CF - before WC changes CASH USED IN OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: In 2008, spent $12mln to Mineral rights and properties expand mill capacity to Acquisition and capital expenditures 1,500tpd at the Ying mine. Proceeds on disposal Plant and equipment In 2006, spent $6mln on Acquisition initial 1,000tpd mill to Proceeds on disposal process ore from the Ying Equity Investments mine. Marketable securities Luoyang Yongning Gold and Lead Smelting Co. Ltd Sale of (purchase of) investments Prepayments to acquire plant and equipment Reclamation deposit paid Cash transferred in on acquisition of Ying Project Payment to Joint Venture partner for acquisition of Henan Found Other CASH USED IN INVESTING ACTIVITIES
In F2008, purchased CASH FLOWS FROM FINANCING ACTIVITIES: the LM & TLP Advance to related parties, net of repayments received properties for Bank loan and notes payable US$25.5mln. Proceeds Repayments In F2008, paid $0.05 per Non-controlling interest share dividend. Contribution Distribution Cash dividends distributed In F2009, paid $0.08 per Capital stock share dividend. Proceeds from issuance of common share Share cancellation CASH USED IN FINANCING ACTIVITIES

F2006A F2007A F2008A F2009A F2010E (6.3) 0.2 25.1 0.1 0.3 59.9 0.1 0.3 0.1 (4.4) (0.6) 2.5 19.2 3.7 0.0 80.9 79.8 (16.0) 0.1 1.5 (7.9) 0.8 2.1 1.5 7.2 55.4 44.7 47.0 38.5 0.1 0.4 0.8 1.9 13.3 4.8 1.1 61.1 66.0

F2011E 68.8 0.2 (1.9) 1.6 (1.9) 2.3 20.6 7.1 (4.5) 92.4 104.2

-0.0 (0.3) (4.4) 1.7 0.0 2.3 2.2 (0.1) 7.2 0.1 1.5 0.0 (2.5) 32.0 (1.6) 34.2

In F2008, acquired interest in HPG project for US$6.3mln.

In 2009, purchased the GC property for US$61.95mln, split 40% cash, 60% equity of SVM shares @ $8.20 per share.

(7.2) 5.5 (0.8) (4.5) 1.9 (1.8) (0.4) (7.3) (0.24) 10.69 10.4 (0.1)

(13.4) (7.2) 0.0 0.5 (1.3) (21.3) 1.8 47.8 (5.5) 44.1 0.6

(36.6) 0.6 (7.5) 0.2 (5.6) (29.5) (3.4) (81.8) (1.4) (3.4) (6.9) 2.3 (9.4) 5.1

(37.1) 0.8 (12.7) 0.0 (0.3) 13.0 (0.4) 0.0 (36.7) (0.0) 0.7 0.2 (13.2) (5.5) 22.7 (9.5) (4.6) (11.3)

(21.2) (5.0) 0.1 (1.4) 0.0 (14.3) (0.5) (0.1) (42.3) (0.1) 2.9 (2.1) (7.2) (12.0) 1.3 (17.2) 2.7

(25.6) 0.5 (9.5) 0.0 (31.4) (14.3) (23.4) (103.5) 0.2 (1.5) (10.6) (13.1) 115.8 90.8 5.1

In 2010, purchased the Silvertip property in BC for US$7.5mln cash and $7.5mln of SVM shares for total consideration of $15mln.

In 2011, purchased the BYP property for US$33mln.

For F2012, SVM plans to spend $18.5mln at the Ying mine on mine development, which includes shafts, declines, exploration drilling, ramps and tailings facility.

In F2010, paid $0.08 per share dividend.

In F2011, paid $0.08 per share dividend.

Effects of exchange rate on cash

EOY cash and equivalents + short term investments

12.6

66.9

82.9

64.1

93.3

204.9

Source: Company Reports, Raymond James Ltd.

Raymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2

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Silvercorp Metals Inc.

Important Investor Disclosures
Raymond James is the global brand name for Raymond James & Associates (RJA) and its non-US affiliates worldwide. Raymond James & Associates is located at The Raymond James Financial Center, 880 Carillon Parkway, St. Petersburg, FL 33716, (727) 567-1000. Affiliates include the following entities, which are responsible for the distribution of research in their respective areas. In Canada, Raymond James Ltd., Suite 2200, 925 West Georgia Street, Vancouver, BC V6C 3L2, (604) 659-8200. In Latin America, Raymond James Latin America, Ruta 8, km 17, 500, 91600 Montevideo, Uruguay, 00598 2 518 2033. In Europe, Raymond James European Equities, 40, rue La Boetie, 75008, Paris, France, +33 1 45 61 64 90. This document is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. The securities discussed in this document may not be eligible for sale in some jurisdictions. This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal recommendation nor does it take into account the particular investment objectives, financial situations, or needs of individual clients. Information in this report should not be construed as advice designed to meet the individual objectives of any particular investor. Investors should consider this report as only a single factor in making their investment decision. Consultation with your investment advisor is recommended. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. The information provided is as of the date above and subject to change, and it should not be deemed a recommendation to buy or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. Persons within the Raymond James family of companies may have information that is not available to the contributors of the information contained in this publication. Raymond James, including affiliates and employees, may execute transactions in the securities listed in this publication that may not be consistent with the ratings appearing in this publication. With respect to materials prepared by Raymond James Ltd. (“RJL”), all expressions of opinion reflect the judgment of the Research Department of RJL, or its affiliates, at this date and are subject to change. RJL may perform investment banking or other services for, or solicit investment banking business from, any company mentioned in this document. All Raymond James Ltd. research reports are distributed electronically and are available to clients at the same time via the firm’s website (http://www.raymondjames.ca). Immediately upon being posted to the firm’s website, the research reports are then distributed electronically to clients via email upon request and to clients with access to Bloomberg (home page: RJLC), First Call Research Direct and Reuters. Selected research reports are also printed and mailed at the same time to clients upon request. Requests for Raymond James Ltd. research may be made by contacting the Raymond James Product Group during market hours at (604) 659-8000. In the event that this is a compendium report (i.e., covers 6 or more subject companies), Raymond James Ltd. may choose to provide specific disclosures for the subject companies by reference. To access these disclosures, clients should refer to: http://www.raymondjames.ca (click on Equity Capital Markets / Equity Research / Research Disclosures) or call toll-free at 1-800-667-2899.

Analyst Information
Analyst Compensation: Equity research analysts and associates at Raymond James are compensated on a salary and bonus system. Several factors enter into the compensation determination for an analyst, including i) research quality and overall productivity, including success in rating stocks on an absolute basis and relative to the local exchange composite Index and/or a sector index, ii) recognition from institutional investors, iii) support effectiveness to the institutional and retail sales forces and traders, iv) commissions generated in stocks under coverage that are attributable to the analyst’s efforts, v) net revenues of the overall Equity Capital Markets Group, and vi) compensation levels for analysts at competing investment dealers. Analyst Stock Holdings: Effective September 2002, Raymond James equity research analysts and associates or members of their households are forbidden from investing in securities of companies covered by them. Analysts and associates are permitted to hold long positions in the securities of companies they cover which were in place prior to September 2002 but are only permitted to sell those positions five days after the rating has been lowered to Underperform.

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Silvercorp Metals Inc.

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The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person's compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.

Ratings and Definitions
Raymond James Ltd. (Canada) definitions Strong Buy (SB1) The stock is expected to appreciate and produce a total return of at least 15% and outperform the S&P/TSX Composite Index over the next six months. Outperform (MO2) The stock is expected to appreciate and outperform the S&P/TSX Composite Index over the next twelve months. Market Perform (MP3) The stock is expected to perform generally in line with the S&P/TSX Composite Index over the next twelve months and is potentially a source of funds for more highly rated securities. Underperform (MU4) The stock is expected to underperform the S&P/TSX Composite Index or its sector over the next six to twelve months and should be sold. Raymond James & Associates (U.S.) definitions Strong Buy (SB1) Expected to appreciate, produce a total return of at least 15%, and outperform the S&P 500 over the next six to 12 months. For higher yielding and more conservative equities, such as REITs and certain MLPs, a total return of at least 15% is expected to be realized over the next 12 months. Outperform (MO2) Expected to appreciate and outperform the S&P 500 over the next 12-18 months. For higher yielding and more conservative equities, such as REITs and certain MLPs, an Outperform rating is used for securities where we are comfortable with the relative safety of the dividend and expect a total return modestly exceeding the dividend yield over the next 12-18 months. Market Perform (MP3) Expected to perform generally in line with the S&P 500 over the next 12 months. Underperform (MU4) Expected to underperform the S&P 500 or its sector over the next six to 12 months and should be sold. Suspended (S) The rating and price target have been suspended temporarily. This action may be due to market events that made coverage impracticable, or to comply with applicable regulations or firm policies in certain circumstances, including when Raymond James may be providing investment banking services to the company. The previous rating and price target are no longer in effect for this security and should not be relied upon. Raymond James Latin American rating definitions Strong Buy (SB1) Expected to appreciate and produce a total return of at least 25.0% over the next twelve months. Outperform (MO2) Expected to appreciate and produce a total return of between 15.0% and 25.0% over the next twelve months. Market Perform (MP3) Expected to perform in line with the underlying country index. Underperform (MU4) Expected to underperform the underlying country index. Suspended (S) The rating and price target have been suspended temporarily. This action may be due to market events that made coverage impracticable, or to comply with applicable regulations or firm policies in certain circumstances, including when Raymond James may be providing investment banking services to the company. The previous rating and price target are no longer in effect for this security and should not be relied upon. In transacting in any security, investors should be aware that other securities in the Raymond James research coverage universe might carry a higher or lower rating. Investors should feel free to contact their Financial Advisor to discuss the merits of other available investments. Raymond James European Equities rating definitions Strong Buy (1) Expected to appreciate, produce a total return of at least 15%, and outperform the Stoxx 600 over the next 6 to 12 months. Outperform (2) Expected to appreciate and outperform the Stoxx 600 over the next 12 months. Market Perform (3) Expected to perform generally in line with the Stoxx 600 over the next 12 months. Underperform (4) Expected to underperform the Stoxx 600 or its sector over the next 6 to 12 months. Suitability Categories (SR) For stocks rated by Raymond James & Associates only, the following Suitability Categories provide an assessment of potential risk factors for investors. Suitability ratings are not assigned to stocks rated Underperform (Sell). Projected 12month price targets are assigned only to stocks rated Strong Buy or Outperform. Total Return (TR) Lower risk equities possessing dividend yields above that of the S&P 500 and greater stability of principal. Growth (G) Low to average risk equities with sound financials, more consistent earnings growth, possibly a small dividend, and the potential for long-term price appreciation.

Raymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 10 of 13

Silvercorp Metals Inc.

Aggressive Growth (AG) Medium or higher risk equities of companies in fast growing and competitive industries, with less predictable earnings and acceptable, but possibly more leveraged balance sheets. High Risk (HR) Companies with less predictable earnings (or losses), rapidly changing market dynamics, financial and competitive issues, higher price volatility (beta), and risk of principal. Venture Risk (VR) Companies with a short or unprofitable operating history, limited or less predictable revenues, very high risk associated with success, and a substantial risk of principal.

Rating Distributions
Coverage Universe Rating Distribution RJL Strong Buy and Outperform (Buy) Market Perform (Hold) Underperform (Sell) 78% 21% 1% RJA 58% 38% 5% RJ LatAm 35% 56% 9% Investment Banking Distribution RJL 58% 38% 0% RJA 16% 5% 2% RJ LatAm 47% 0% 0%

Raymond James Relationship Disclosures
Raymond James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking services from all companies under research coverage within the next three months. Company Name Silvercorp Metals Inc. Disclosure Within the last 12 months, Silvercorp Metals Inc. has paid for all or a material portion of the travel costs associated with a site visit by the Analyst and/or Associate. Raymond James Ltd. has managed or co-managed a public offering of securities within the last 12 months with respect to Silvercorp Metals Inc. Raymond James Ltd. has provided investment banking services within the last 12 months with respect to Silvercorp Metals Inc. Raymond James Ltd. has received compensation for investment banking services within the last 12 months with respect to Silvercorp Metals Inc.

Stock Charts, Target Prices, and Valuation Methodologies
Valuation Methodology: The Raymond James methodology for assigning ratings and target prices includes a number of qualitative and quantitative factors including an assessment of industry size, structure, business trends and overall attractiveness; management effectiveness; competition; visibility; financial condition, and expected total return, among other factors. These factors are subject to change depending on overall economic conditions or industry- or companyspecific occurrences. Target Prices: The information below indicates our target price and rating changes for SVM stock over the past three years.

Raymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Silvercorp Metals Inc.

Canada Research | Page 11 of 13

Update Date

Closing Price

Target Price 16.00 16.80 16.50 15.65 13.00 R 13.00 10.15 9.75 9.50 6.75 5.00 6.00 6.50 7.20

M 2$ 6 0 O 1 .5 M 2$ .2 M 2$ .5 O 7 0 O 6 0 M 2$ .0 O 6 0 M 2$ .0 O 5 0 $ 60 1. 0 $ 40 1. 0 M 2$ .7 O 6 5 M 2$ .5 O 9 0 M 2$ .7 O 9 5 M 2$ 0 5 M 2$ 3 0 O 1 .1 O 1 .0 R R M 2$ 3 0 O 1 .0 M 2$ 6 0 O 1 .8 M 2$ 6 0 O 1 .0

Sc rt Pi e( S) e ui y rc U $

$ 20 1. 0 $ 00 1. 0 $. 0 80 $. 0 60 $. 0 40 $. 0 20 Sp1 - 8 e - 50 Ag1 - 9 u - 70 Sp1 - 9 e - 40 Ag1 - 0 u - 61 Sp1 - 0 e - 31 Mr 20 a-0 - 9 Mr 00 a-3 - 9 Mr 11 a-0 - 0 Mr 91 a-2 - 0 Mr 71 a-1 - 1 My 50 a-2 - 9 My 41 a-2 - 0 My 21 a-1 - 1 Nv 00 o-1 - 8 Dc 80 e-0 - 8 Nv 90 o-0 - 9 Dc 70 e-0 - 9 Nv 81 o-0 - 0 Dc 41 e-0 - 0 Dc 11 e-3 - 0 Ag2 - 1 u - 31 F b0 - 9 e - 20 F b0 - 0 e - 11 F b1 - 1 e - 71 Ot 30 c-1 - 8 J n 50 a-0 - 9 Ar 70 p-2 - 9 J n 20 u-2 - 9 Ot 20 c-1 - 9 J n 41 a-0 - 0 Ar 61 p-2 - 0 J n 11 u-2 - 0 Ot 11 c-1 - 0 J n 51 a-2 - 1 Ar 41 p-1 - 1 J n 71 u-0 - 1 J l-2 - 9 u 00 J l-1 - 0 u 91 J l-0 - 1 u 21 J l-2 - 1 u 71 $. 0 00

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Aug-03-11 Apr-26-11 Jan-26-11 Jan-04-11 Jan-04-11 Dec-11-10 Nov-11-10 Aug-13-10 May-14-10 Dec-01-09 Oct-28-09 Mar-16-09 Jan-21-09 Jan-02-09 Oct-23-08

10.23 13.89 9.96 12.37 13.04 12.93 12.23 7.14 8.49 8.07 4.90 2.73 2.50 2.60 2.05

Dte S p m e 1 2 1 a : e te b r 2 0 1 P e r ic Cv r g S s e d d o ea e u p n e Rti gCa g an h n e T rg t Pc a dRtin Ca g a e ri e n a g h n e T rg t Pc Ca g a e ri e h n e S lit A ju tmn p d s et

Valuation Methodology: Our valuation methodology for the company considers the stock's valuation as it compares to our estimate of Net Asset Value (NAV).

Risk Factors
General Risk Factors: Following are some general risk factors that pertain to the projected target prices included on Raymond James research: (1) Industry fundamentals with respect to customer demand or product / service pricing could change and adversely impact expected revenues and earnings; (2) Issues relating to major competitors or market shares or new product expectations could change investor attitudes toward the sector or this stock; (3) Unforeseen developments with respect to the management, financial condition or accounting policies or practices could alter the prospective valuation. Risks - Precious Metals Acquisition Risks – Mining is very competitive when it comes to acquiring additional properties or projects. This could negatively impact companies that overpay for assets or purchase assets that fail to meet expectations. Asset Ownership – The validity of most mining and exploration titles can be contested, resulting in disruptions, increased expenses, and potentially the loss of the asset. Commodity Prices – All mining companies are impacted to varying degrees by changes in commodity prices. Rising or falling commodity prices have a direct impact on earnings, cash flow, and NAV estimates. Commodity prices also impact operating, capital spending, and exploration decisions, which may have longer term effects. Currency Risk – Any mines or projects operating in countries that are not US dollar denominated will have some exposure to currency risk. Any dramatic strengthening or weakening will impact capital and operating costs at these mines and/or projects. Development Risk – During the development phase, certain events can lead to unforeseen delays or costs overruns, which could dramatically change the economics of a project. Energy Prices – Energy typically accounts for a material amount of the cost involved in producing precious metals. Some processes are more energy-intensive than others, but a trend in rising energy prices would have a negative impact on margins, all else being equal. Environmental Risks – Environmental regulation is continuously becoming stricter and requiring greater capital expenditures or guarantees. Companies could be negatively impacted if regulations in the areas in which they are active become more stringent or expensive. Infrastructure Risk – Although improving, there is a lack of qualified professionals and a shortage of services in the mining industry as a whole. In today’s robust environment, securing services such as drill rigs, consultants and assaying facilities can prove difficult, leading to delays and an increase in capital requirements. Operational Risk – Operating issues are inherent with all mining activities. Changes in ground conditions, as an example, can lead to production shortfalls, cost increases, and/or resource reductions (temporary or permanent). The impact on our estimates would depend on the nature, as well as the severity, of the operating issue.
Raymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Rating 2 2 2 2 2 R 2 2 2 2 2 2 2 2 2

Sl ec r Mt l I c ( V )3y. So kP r omn e i v r op eas n . S M r t c ef r a c

Canada Research | Page 12 of 13

Silvercorp Metals Inc.

Permitting Risk – Permits are essential to all development projects and mining operations; delays in obtaining or refusal of critical permits can significantly impact the valuation of a project. Political/Country Risk – Each country poses unique risks. Governments can change mining and/or environmental laws and can implement tax or royalty changes, which could potentially have a negative impact on company earnings, cash flow, and NAV estimates. There is also the risk of asset expropriation or nationalization without compensation and political regimes can change, along with the attitude towards mining activities. Risks - Silvercorp Metal Mining is an inherently risky business. Key industry wide risks include the political environment, operating issues and metal prices. More company-specific risks relating to Silvercorp include: 1) Silvercorp derives 100% of its asset value from properties in China - higher political risk. 2) We make a number of assumptions relating to two of Silvercorp’s assets, which adds to our valuation risk. 3) Silvercorp also derives a significant amount of its revenue from by-product lead and zinc production. If lead or zinc prices were to drop significantly below our price assumptions our estimates would be negatively impacted. Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability categories, is available for Raymond James at rjcapitalmarkets.com/SearchForDisclosures_main.asp and for Raymond James Limited at www.raymondjames.ca/researchdisclosures.

International Disclosures
For clients in the United States: Investing in securities of issuers organized outside of the U.S., including ADRs, may entail certain risks. The securities of non-U.S. issuers may not be registered with, nor be subject to the reporting requirements of, the U.S. Securities and Exchange Commission. There may be limited information available on such securities. Investors who have received this report may be prohibited in certain states or other jurisdictions from purchasing the securities mentioned in this report. Please ask your Financial Advisor for additional details. Raymond James Ltd. is not a U.S. broker-dealer and therefore is not governed by U.S. laws, rules or regulations applicable to U.S. broker-dealers. Consequently, the persons responsible for the content of this publication are not licensed in the U.S. as research analysts in accordance with applicable rules promulgated by the U.S. Self Regulatory Organizations. Any U.S. Institutional Investor wishing to effect trades in any security should contact Raymond James (USA) Ltd., a U.S. broker-dealer affiliate of Raymond James Ltd. For clients in the United Kingdom: For clients of Raymond James & Associates (RJA) and Raymond James Financial International, Ltd. (RJFI): This report is for distribution only to persons who fall within Articles 19 or Article 49(2) of the Financial Services and Markets Act (Financial Promotion) Order 2000 as investment professionals and may not be distributed to, or relied upon, by any other person. For clients of Raymond James Investment Services, Ltd.: This report is intended only for clients in receipt of Raymond James Investment Services, Ltd.’s Terms of Business or others to whom it may be lawfully submitted. For purposes of the Financial Services Authority requirements, this research report is classified as objective with respect to conflict of interest management. RJA, Raymond James Financial International, Ltd., and Raymond James Investment Services, Ltd. are authorized and regulated in the U.K. by the Financial Services Authority. For institutional clients in the European Economic Area (EEA) outside of the United Kingdom: This document (and any attachments or exhibits hereto) is intended only for EEA institutional clients or others to whom it may lawfully be submitted. Proprietary Rights Notice: By accepting a copy of this report, you acknowledge and agree as follows: This report is provided to clients of Raymond James only for your personal, noncommercial use. Except as expressly authorized by Raymond James, you may not copy, reproduce, transmit, sell, display, distribute, publish, broadcast, circulate, modify, disseminate or commercially exploit the information contained in this report, in printed, electronic or any other form, in any manner, without the prior express written consent of Raymond James. You also agree not to use the information provided in this report for any unlawful purpose.
This is RJA client releasable research

Raymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Silvercorp Metals Inc.

Canada Research | Page 13 of 13

This report and its contents are the property of Raymond James and are protected by applicable copyright, trade secret or other intellectual property laws (of the United States and other countries). United States law, 17 U.S.C. Sec.501 et seq, provides for civil and criminal penalties for copyright infringement. Additional information is available upon request. This document may not be reprinted without permission. RJL is a member of the Canadian Investor Protection Fund. ©2011 Raymond James Ltd.

Raymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2

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