International Business Credit Report ORDER INFO.: =============== DATE OF REPORT : June 16, 2011 CLIENT S REF. : - OUR REF. : SC S INFO.: ================ ANHUI YANGTZE MINING CO., LTD. 安 徽 扬 子 矿 业 有 限 公 司 ROOM 102, BUILDING 21, HETAI XINGCHENG, CHIZHOU CITY ANHUI PROVINCE 247000 PR CHINA (AS REGISTERED) 安 徽 省 池 州 市 和 泰 星 城 21 幢 102 室 ( 注 册 地 址 ) TEL: N/A FAX: N/A EXECUTIVE SUMMARY DATE OF REGISTRATION : APRIL 2, 2002 REGISTRATION NO. : 341700400000332 LEGAL FORM : CHINESE-FOREIGN CONTRACTUAL JOINT VENTURE ENTERPRISE CHIEF EXECUTIVE : MR. FENG RUI (LEGAL REPRESENTATIVE) EMPLOYEES : N/A REGISTERED CAPITAL : USD 4,000,000 BUSINESS LINE : MINING REVENUE : CNY 10,000 (AS OF DEC. 31, 2009) EQUITIES : CNY 26,027,000 (AS OF DEC. 31, 2009) PAYMENT : AVERAGE RECOMMENDED CREDIT LIMIT : C.O.D. MARKET CONDITION : FAIR FINANCIAL CONDITION : POOR OPERATIONAL TREND : FAIR GENERAL REPUTATION : AVERAGE EXCHANGE RATE : CNY 6.48 = USD 1 AS OF 2011-6-16 CREDIT OPINION Our credit scoring system indicates the following credit scores. CREDIT RATING : 5- (see below explanatory notes) Rating Key Credit Risk Assessment Proposed Credit Limit (In Concerned Business Field) 1 Minimal Credit can proceed with favorable terms Large amount 2 Low Credit can proceed promptly Fairly large amount 3 Average Credit can proceed normally Moderate amount
4 Above average Credit should proceed with monitor Small amount - periodical review 5 Fairly High Credit should be extended under guarantee C.O.D. to small amount 6 High Credit is not recommended C.O.D. NR Assessment not conducted Insufficient data available No recommendation This rating serves as a reference to assess SC s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) in our credit analysis are as follows: Financial condition (40%) Ownership background (10%) Payment record (10%) Credit history (15%) Market trend (10%) Operational size (15%) In case of unlimited companies, newly established companies, or lack of financial data, more weight is given to Ownership background and Payment record in our analysis. Adopted abbreviations (as follows) SC - Subject Company (the company inquired by you) N/A Not available CNY China Yuan Ren Min Bi 2
CURRENT CONDITION SC was registered as a Chinese-foreign contractual joint venture enterprise at Chizhou Municipal Administration for Industry & Commerce (AIC-The official body of issuing and renewing business license) on April 2, 2002. Company Status: Chinese-foreign contractual joint venture enterprise This form of business in PR China is defined as a legal person. It is a limited co. jointly invested by one or more foreign companies and one or more PR China controlled companies within the territories of PR China. The investing parties are free to agree on the proportion of capital investment, method of profit distribution and liabilities bearing according to the provisions of the contract. The joint venture usually has a limited duration of 10 to 50 years. SC s registered business scope includes copper, lead, zinc, paragenetic minerals, and associated minerals mining (according to the mining license), mineral separation, geological exploration and sales. ( 该 公 司 的 法 定 经 营 范 围 包 括 : 铜 铅 锌 以 及 与 其 共 生 和 伴 生 的 矿 产 开 采 ( 凭 采 矿 许 可 证 开 采 ) 选 矿 地 质 勘 查 和 销 售 ) SC is mainly engaged in copper-lead-zinc mining. ( 该 公 司 目 前 实 际 主 要 从 事 铜 铅 锌 矿 开 采 ) Mr. Feng Rui ( 冯 锐 ) has been legal representative, chairman, and general manager of SC since 2002. During our checks, we found the registered telephone number 86 (0) 566-4540113 in local AIC, but this number does not exist now. Failing to contact SC, we could not confirm whether SC operates from the registered office address or in another location. SC holds silver, lead and zinc exploration permits on the Gaocheng project and Shimentou project in the Guangdong Province. WEB SITE SC is not known to host website of its own at present. 3
KEY EVENTS/RECENT DEVELOPMENT SC s Organization Code: 737316819 SC s current paid-in capital is USD 4,000,000 (CNY 30,568,475). Changes of its registered information are as follows: Date of Item Before the change After the change change 2003-8-26 Registered Address Economy & Technology Development Zone, Chizhou 池 州 市 经 济 技 术 Meijie Town, Guichi District, Chizhou 池 州 市 贵 池 区 梅 街 镇 开 发 区 Paid-in Capital of USD 250,000 USD 500,000 Foreign Owner 2007-9-11 Paid-in Capital of USD 500,000 USD 3,500,000 Foreign Owner 2009-2-26 Registered Address Meijie Town, Guichi District, Chizhou 池 州 市 贵 池 区 梅 街 镇 2010-5-11 Business Scope Copper, lead, zinc, paragenetic minerals, and associated minerals mining, mineral separation, geological exploration and sales. Unknown Room 102, Building 21, Hetai Xingcheng, Chizhou 池 州 市 和 泰 星 城 21 幢 102 室 Copper, lead, zinc, paragenetic minerals, and associated minerals mining (according to the mining license), mineral separation, geological exploration and sales. Paid-in Capital of USD 3,500,000 USD 4,000,000 Foreign Owner Registration No. 0009 341700400000332 4
SHAREHOLDER Name Chizhou South Mining Co., Ltd. 池 州 市 南 方 矿 业 有 限 公 司 Investment Investment Items Yangtze Mining Ltd. (B.V.I.) Capital (USD 4,000,000) 英 属 维 尔 京 群 岛 扬 子 矿 业 有 限 公 司 Chizhou South Mining Co., Ltd. ======================= Registration No.: 341700000014228 (Its former registration no.: 3429002300138) Date of Registration: 2001-07-17 Legal Representative: Wang Liqiang 王 力 强 Business Scope: processing and selling minerals. 矿 产 品 加 工 及 销 售 MANAGEMENT Legal Representative, Chairman, and General Manager: Mr. Feng Rui ( 冯 锐 ), Chinese communist party member, passport No. BC109664, high school degree, he is currently responsible for the overall management of SC. Working Experience(s): From 2002 to present Working in SC as legal representative, chairman, and general manager Vice Chairman: Mr. Sun Jigui ( 孙 继 贵 ), ID#110108196306282370, 48 years old, he is currently responsible for the daily management of SC. Working Experience(s): From 2002 to present Working in SC as vice chairman; Also working in Xinshao Yunxiang Mining Co., Ltd. as legal representative, in Henan Huawei Mining Co., Ltd. as major management, in Guangdong Found Mining Co., Ltd. as general manager Other Management: 5
Mr. Shen Shaoyang ( 沈 绍 阳 ) Nationality: Canada Working in Henan Huawei Mining Co., Ltd. and Guangdong Found Mining Co., Ltd. as legal representative BUSINESS OPERATION SC is mainly engaged in copper-lead-zinc mining. ( 该 公 司 目 前 实 际 主 要 从 事 铜 铅 锌 矿 开 采 ) Exhausting our efforts, we are unable to find SC s telephone number in various information sources, including the internet, yellow pages and telecom companies. It is therefore not possible to contact SC directly to obtain further information. (According to website (www.silvercorp.ca) of its related company-silvercorp Metals Inc.): -------------------------------------------- Silvercorp acquired the Gaocheng ( GC ) and Shimentou ( SMT ) silver-lead-zinc exploration permits in April 2008. Located about 200 kilometers west of Guangzhou City, Guangdong Province, southern China, the permits cover an area of 5.5 km2 and 9.5 km2 respectively. Since 2001, the permits have been explored for gold, silver, lead, zinc, and sulphur. The two exploration permits are 100% owned by SC. The buying terms of SC include T/T and Credit of 30-60 days. The payment terms of SC include T/T and Credit of 30-60 days. 6
RELATED COMPANY Silvercorp Metals Inc. Add: Suite 1378-200 Granville Street Vancouver, BC, Canada V6C 1S4 Tel: (604) 669-9397 Fax: (604) 669-9387 Email: corp@silvercorp.ca Website: www.silvercorp.ca Fortune Mining Limited (B.V.I.) B.C. Ltd. (Canada) Victor Mining Ltd. (Barbados) Henan Found Mining Co., Ltd. 河 南 发 恩 德 矿 业 有 限 公 司 Yangtze Mining (H.K.) Limited Henan Huawei Mining Co., Ltd. 河 南 华 威 矿 业 有 限 公 司 Guangdong Found Mining Co., Ltd. (SC s subsidiary) 广 东 发 恩 德 矿 业 有 限 公 司 ( 该 公 司 下 属 公 司 ) Xinshao Yunxiang Mining Co., Ltd. 新 邵 县 云 翔 矿 业 有 限 公 司 Etc. SC has a branch, as follows, ------------------------------------ Anhui Yangtze Mining Co., Ltd. Yunfu Branch 安 徽 扬 子 矿 业 有 限 公 司 云 浮 分 公 司 7
PAYMENT Overall payment appraisal: ( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet be determined The appraisal serves as a reference to reveal SC's payments habits and ability to pay. It is based on the 3 weighed factors: Trade payment experience (through current enquiry with SC's suppliers), our delinquent payment records and our debt collection record concerning SC. Trade payment experience: N/A Delinquent payment record: None in our database. Debt collection record: No overdue amount owed by SC was placed to us for collection within the last 6 years. BANKING The bank information of SC is not filed in local AIC. 8
FINANCIALS Balance Sheet Unit: CNY 000 As of Dec. 31, 2008 As of Dec. 31, 2009 Cash 428 56 Accounts receivable 0 0 Other receivable 25,724 22,923 Advances to suppliers 591 1 Inventory 770 0 Other current assets 47 0 ------------------ ------------------ Current assets 27,560 22,980 Long-term equity investment 0 1,500 Fixed assets 8,531 191 Construction in progress 0 0 Intangible assets 128 108 Long-term prepaid expenses 26 0 Deferred income tax assets 0 0 Other non-current assets 0 0 ------------------ ------------------ Total assets 36,245 24,779 ============= ============= Short-term loans 0 0 Accounts payable 222 178 Payroll payable 31 10 Taxes payable -1,541-1,542 Other payable 84 106 Other current liabilities 15 0 ------------------ ------------------ Current liabilities -1,189-1,248 Non-current liabilities 0 0 ------------------ ------------------ Total liabilities -1,189-1,248 Equities 37,434 26,027 ------------------ ------------------ Total liabilities & equities 36,245 24,779 ============= ============= 9
Income Statement Unit: CNY 000 As of Dec. 31, 2008 As of Dec. 31, 2009 Revenue 1,159 10 Cost of sales 247 9,152 Tax and associate charge 0 0 Sales expense 166 0 Management expense 7,476 1,621 Finance expense -97-1 Non-operating income 800 0 Non-operating expense 113 645 Profit before tax -5,946-11,407 Less: profit tax 0 0 Profits -5,946-11,407 Note: SC s Y2009 long-term equity investment (CNY 1,500,000) invested in its subsidiary- Guangdong Found Mining Co., Ltd. SC s Y2010 financials are not filed in local AIC. Important Ratios ============= As of Dec. 31, 2008 As of Dec. 31, 2009 *Current ratio -23.18-18.41 *Quick ratio -22.53-18.41 *Liabilities to assets -0.03-0.05 *Net profit margin (%) -513.03-114,070.00 *Return on total assets (%) -16.41-46.03 *Inventory /Revenue 365 243 days -- *Accounts receivable/ Revenue 365 -- -- * Revenue/Total assets 0.03 -- * Cost of sales / Revenue 0.21 915.2 Overall financial condition of the SC: Poor. CONCLUSIONS SC is considered medium-sized in its line with poor financial conditions. Great caution is required in providing credit to SC & C.O.D. is recommended. END OF THIS REPORT 10