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Canada ResearchPublished by Raymond James Ltd

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

Silvercorp Metals Inc. September 14, 2011

SVM-NYSE | SVM.T-TSX Company CommenBrad Humphrey | 416.777.4917 | [email protected]

Phil Russo (Associate) | 416.777.7084 | [email protected]

Tracy Reynolds (Associate) | 416.777.7042 | [email protected]

Precious Metals | Silver

Weathering the Storm

EventSilvercorp 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.

ActionWe 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.

AnalysisWe 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.

ValuationWe 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 3Q 4Q Full Revenue NAV

Mar Jun Sep Dec Year (mln)

2011A US$0.09 US$0.07 US$0.13 US$0.08 US$0.37 US$176

Old 2012E 0.16A 0.15 0.17 0.12 0.59 279 9.22

New 2012E 0.16A 0.14 0.16 0.12 0.59 276 9.22

Old 2013E 0.15 0.15 0.15 0.14 0.58 293 NA

New 2013E 0.15 0.15 0.15 0.14 0.58 293 NA

Source: Raymond James Ltd., Thomson One. Fiscal Year End March 31st . Fiscal years ending before May

are treated as previous year.

Rating & Target

Outperform 2

Target Price (6-12 mos): US$16.00

Current Price ( Sep-13-11 ) US$6.30Total Return to Target 154%

52-Week Range US$16.32 - US$6.45

Market Data

Market Capitalization (mln) US$1,103

Current Net Debt (mln) -US$230

Enterprise Value (mln) US$872

Shares Outstanding (mln, f.d.) 175.0

Average Daily Volume (000s) 3,439

Dividend/Yield US$0.08/1.3%

Key Financial Metrics

2011A 2012E 2013E

P/E

25.0x 11.0x 10.8x

P/NAV 0.7x 0.0x

Ag Price (US$/oz)

Old US$23.96 US$39.79 US$37.63

New US$23.96 US$39.79 US$37.63

Ag Production (mln oz)

Old 5.0 5.6 6.4

New 5.0 5.6 6.4

Ag Cash Cost (US$/oz)

Old US$(6.59) US$(6.58) US$(5.57)

New US$(6.59) US$(6.15) US$(5.57)

CFPS

Old US$0.55 US$0.91 US$0.88

New US$0.55 US$0.90 US$0.88

P/CFPS

18.7x 7.0x 7.2xEBITDA (mln)

Old US$97 US$163 US$173

New US$97 US$161 US$173

EV/EBITDA

16.1x 5.4x 5.1x

Company Description

Silvercorp is a producer, developer and explore

focused on silver assets in China (albeit with significan

by-products). The company's key producing asset is the

high-grade SGX Silver project.



Canada Research | Page 2 of 13 Silvercorp Metals Inc

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

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 todays 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 companys 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 featurein 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 Silvercorps 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 todays 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.



Silvercorp Metals Inc. Canada Research | Page 3 of 13


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 companys

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 dont believe

the Chinese bank statements they hold roughly $90 mln outside of China). This, alongwith our site visits and the VAT receipts give us the comfort we need to maintain our

view.





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 theproduction, quality and resource estimates of SVMs key SGX (Ying) mine as

shown in its 40-F and independent NI 43-101 reports that rely heavily upon dataprovided by management. No independent geologists have visited SVMs 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 Silvercorps

NI43-101 and the L&Rs 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 Silvercorps 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 2010s 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 pro-

rate 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.





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 ofsustaining 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 Silvercorps peers are and stated that Silvercorps

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 Founds Sales Growth in 2010 came from Two QuestionableCustomers. Management Failed to Disclose SVMs 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 theprices 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 Silvercorps 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 SVMsMarket 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, becauseSilvercorp 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 Fengs Relative Giving Him a1500% 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





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. Fengs (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 Silvercorps 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).

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 companys 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 753.1 4.23

Other Assets 699.2 3.93

Investments 36.4 0.20

Total Mining Assets 1488.7 8.37

Other Assets 150.6 0.85

Total NAV 1639.4 9.22

Source: Company Reports, Raymond James Ltd.





Appendix A

Silvercorp's Historical Cash Flow Statement from 2006 to 2011 (in US$mln)

Cash Flow Statement F2006A F2007A F2008A F2009A F2010E F2011E

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Gain (loss) (6.3) 25.1 59.9 (16.0) 38.5 68.8

Add (deduct) noncas h items:

Accretion of asset retirement obligations - 0.1 0.1 0.1 0.1 0.2

Equity income (loss) 0.2 0.3 0.3 1.5 0.4 (1.9)

Future income tax - - 0.1 (7.9) 0.8 1.6

Gain on disposal of subsidiary - 0.0 - - - (1.9)

Non-cash other income (0.3) (4.4) (4.4) - - -

Loss on disposal of mineral properties 1.7 0.0 (0.6) 0.8 - -

Stock-based compensation 2.3 2.2 2.5 2.1 1.9 2.3

Non-controll ing interest (0.1) 7.2 19.2 1.5 13.3 20.6

Depreciation 0.1 1.5 3.7 7.2 4.8 7.1

Other - 0.0 0.0 55.4 1.1 (4.5)

CF - before WC changes (2.5) 32.0 80.9 44.7 61.1 92.4

CASH USED IN OPERATING ACTIVITIES (1.6) 34.2 79.8 47.0 66.0 104.2

CASH FLOWS FROM INVESTING ACTIVITIES:

Mineral rights and properties

Acquisition and capital expenditures (7.2) (13.4) (36.6) (37.1) (21.2) (25.6)

Proceeds on disposal 5.5 - 0.6 0.8 - 0.5Plant a nd equipment

Acquisition (0.8) (7.2) (7.5) (12.7) (5.0) (9.5)

Proceeds on disposal - 0.0 0.2 0.0 0.1 0.0

Equity Investments

Marketable securities - - - - (1.4) -

Luoyang Yongning Gold and Lead Smelting Co. Ltd - - (5.6) (0.3) 0.0 -

Sale of (purchase of) investments (4.5) 0.5 (29.5) 13.0 (14.3) (31.4)

Prepayments to acquire plant and equipment - - (3.4) (0.4) (0.5) (14.3)

Reclamation deposit paid - - - 0.0 (0.1) -

Cash transferred in on acquisi tion of Ying Project 1.9 - - - - -

Payment to Joint Venture partner for acquisition of Henan Found (1.8) - - - - -

Other (0.4) (1.3) - - - (23.4)

CASH USED IN INVESTING ACTIVITIES (7.3) (21.3) (81.8) (36.7) (42.3) (103.5)

CASH FLOWS FROM FINANCING ACTIVITIES:

Advance to related parties, net of repayments received (0.24) 1.8 (1.4) (0.0) (0.1) 0.2

Bank loan and notes payableProceeds - - - 0.7 2.9 -

Repayments - - - - (2.1) (1.5)

Non-controlling interest

Contribution - - - 0.2 - -

Distribution - - (3.4) (13.2) (7.2) (10.6)

Cash dividends distributed - - (6.9) (5.5) (12.0) (13.1)

Capital stock

Proceeds from issuance of common share 10.69 47.8 2.3 22.7 1.3 115.8

Share cancellation - (5.5) - (9.5) - -

CASH USED IN FINANCING ACTIVITIES 10.4 44.1 (9.4) (4.6) (17.2) 90.8

Effects of exchange rate on cash (0.1) 0.6 5.1 (11.3) 2.7 5.1

EOY cash and equivalents + short term investments 12.6 66.9 82.9 64.1 93.3 204.9

In 2010, purchasedtheSilvertip property in BC forUS$7.5mln cash and$7.5ml n of SVM shares fortotal consideration of$15mln.

In F2008, purchasedthe LM & TLP

properties for

US$25.5mln.

In 2011 , purchased the BYP

prope rty for US$33mln.

In 2006, spent$6mln on

initial 1,000tpd mill to

process ore from the Yingmine.

In 2008, spent $12mln to

expand mill capacity to

1,500t pd at the Ying mine.

For F2012,SVM plans to

spend $18.5mln at the Ying

mine on mine

development, whichincl udes shafts, declines,

exploration drilling, ramps

and tailings facility.

In F2008 , acquired interest

in HPG project for

US$6.3mln.

In F2008, paid $0.05 per

share dividend.

In F2010, paid $0.08 per

share dividend.

In F2011, paid $0.08 pershare dividend.

In F2009, paid $0.08 pershare dividend.

In 2009, purchasedthe GCprope rty for US$61.95mln,split 4 0% cash, 60% equityof SVM shares @ $8.20 p ershare.

Source: Company Reports, Raymond James Ltd.





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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.





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 andexpect 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 suspendedtemporarily. 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 12-

month 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.





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 Investment Banking Distribution

RJL RJA RJ LatAm RJL RJA RJ LatAm

Strong Buy and Outperform (Buy) 78% 58% 35% 58% 16% 47%

Market Perform (Hold) 21% 38% 56% 38% 5% 0%

Underperform (Sell) 1% 5% 9% 0% 2% 0%

Raymond James Relationship Disclosures

Raymond James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking servicesfrom all companies under research coverage within the next three months.

Company Name Disclosure

Silvercorp Metals Inc. 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 company-

specific occurrences.

Target Prices: The information below indicates our target price and rating changes for SVM stock over the past three years.





Price RatingChange Target PriceChange

CoverageSuspended Target PriceandRatingChange Split Adjustment

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

Sep-15-08

Oct-13-08

Nov-10-08

Dec-08-08

Jan-05-09

Feb-02-09

Mar-02-09

Mar-30-09

Apr-27-09

May-25-09

Jun-22-09

Jul-20-09

Aug-17-09

Sep-14-09

Oct-12-09

Nov-09-09

Dec-07-09

Jan-04-10

Feb-01-10

Mar-01-10

Mar-29-10

Apr-26-10

May-24-10

Jun-21-10

Jul-19-10

Aug-16-10

Sep-13-10

Oct-11-10

Nov-08-10

Dec-04-10

Dec-31-10

Jan-25-11

Feb-17-11

Mar-17-11

Apr-14-11

May-12-11

Jun-07-11

Jul-02-11

Jul-27-11

Aug-23-11

SecurityPrice(US$)

SilvercorpMetals Inc. (SVM) 3 yr. Stock PerformanceSilvercorpMetals Inc. (SVM) 3 yr. Stock Performance

Date: September 122011

MO2$7.2 MO2$6.50

MO2$6.00

MO2$5.00

MO2$6.75

MO2$9.50

MO2$9.75 MO2$10.15 MO2$13.00

RR

MO2$13.00

MO2$16.50

MO2$16.80 MO2$16.00

Analyst Recommendations & 12 Month Price ObjectivSB1: Strong Buy MO2: OutperformMP3: Market Perform MU4: UnderperformNR : Not Rated R: Restricted

Text

Update

Date

Closing

Price

Target

Price

Rating

Aug-03-11 10.23 16.00 2

Apr-26-11 13.89 16.80 2

Jan-26-11 9.96 16.50 2

Jan-04-11 12.37 15.65 2

Jan-04-11 13.04 13.00 2

Dec-11-10 12.93 R RNov-11-10 12.23 13.00 2

Aug-13-10 7.14 10.15 2

May-14-10 8.49 9.75 2

Dec-01-09 8.07 9.50 2

Oct-28-09 4.90 6.75 2

Mar-16-09 2.73 5.00 2

Ja n-21-09 2.50 6.00 2

Ja n-02-09 2.60 6.50 2

Oct-23-08 2.05 7.20 2

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, increasedexpenses, 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 todays 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.





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 metalprices. 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 Silvercorps 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 itmay 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 releasableresearch





This report and its contents are the property of Raymond James and are protected by applicable copyright, trade secret or

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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.

2011-09-14 (raymond james ltd. (canada)) svm_ weathering the storm.i8c88a3a204d442389f281c96e9e9d55d

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