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Silver Dragon Resources Inc.
200 Davenport Road
Toronto, Ontario M5R 1J2
Canada

Phone: 416-223-8500
Toll Free(North America): 1-866-512-SDRG (7374)
Fax: 416-223-8507
info@silverdragonresources.com

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News Release

Production Commenced at Erbahuo Silver Mine, China

BEIJING, July 12, 2011 (PRIME NEWSWIRE) -- Silver Dragon Resources Inc. (OTCBB:SDRG) is pleased to announce that production has been formally commenced at the Erbahuo silver mine, located in Wengniute county, Inner Mongolia, China. The Erbahuo mine is 70% owned by Silver Dragon through its subsidiary Chifeng Silver Dragon Resources & Technologies, Ltd. (“Chifeng Silver”) and is currently being operated by Chifeng Silver’s partner Guangxi Hongteng Mining, Ltd. (“GHM”) as part of a five-year arrangement (see press release of March 23, 2011).


Fig 1: Entrance to Erbahuo Silver Project Field Office

Fig 2: Local officials participate in ceremony with Director Hao.

Production was made official with a formal ribbon cutting commencement ceremony. Local officials visited the project, toured the facilities and participated in the ceremony. After three months of preparatory work, GHM started mining silver ore utilizing the currently existing tunnels. An on-site pool leaching system will process the ore with a breakthrough cyanide-free leaching technology. GHM expects to mine out 30,000 to 40,000 tonnes of silver ore resulting in approximately 160,000 ounces of silver production by the end of this year.

“We are excited to see the Erbahuo mine has formally commenced production with the assistance of our strategic partner,” commented Marc Hazout, President and CEO. “With strong partnerships and silver prices at historical highs, we are confident the Erbahuo mine will be a successful operation with revenues reflected in our financial reporting this year.”

“I am very pleased with our mine operator’s efficiency and quality of work and look forward to good profits,” stated Guoqiang Hao, director of Silver Dragon and Huaguan Industrial Corp. (“HIC”). “Moreover, the current mining operation has also revealed some new ore-finding clues that may lead to additional resources, which may significantly boost the profitability of our Erbahuo project.”

About the Erbahuo Silver Mine

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

A National Instrument (NI) 43-101 technical report on this property was completed in July 2007 and updated in 2010 by Micromine Consulting, a resource sector consulting company headquartered in Perth, Australia.

A feasibility study for the Erbahuo polymetallic project was completed in early 2009 by Beijing Tenstar Technology Ltd. of Beijing, China (see press release of April 7, 2009).

About Chifeng Silver Dragon Resources & Technologies, Ltd.

Chifeng Silver Dragon Resources & Technologies, Ltd. (“Chifeng Silver”), is a Sino-American joint venture between Silver Dragon Resources Inc. and Huaguan Industrial Corp. (“HIC”), a Chinese state-owned entity. Chifeng Silver holds the mining rights and license issued by the Department of Land & Resources, Inner Mongolia for the Erbahuo silver mine. The license includes mineable ore types of silver, gold, and lead. The business license, issued to Chifeng Silver by the local industrial and commercial administration, expands Chifeng Silver’s business scope to include silver mining and sales of mineral products (see press release of August 2, 2010).

About Silver Dragon Resources Inc.
Silver Dragon Resources Inc. is a mining and metals company focused on the exploration, acquisition, development and operation of silver mines in proven silver districts globally. Silver Dragon's objective is to acquire silver mining assets that contain promising exploration targets, have highly leveraged, out-of-the-money silver deposits, and/or are producing properties with significant untapped exploration potential. It is management's objective to grow Silver Dragon into a significant silver producer by developing its six Sino-Top properties in China (particularly Dadi and Laopandao), and its Erbahuo Silver mine (via its Chifeng Silver Dragon subsidiary), also in China. For more information, please visit the Company's website at: www.silverdragonresources.com (now available in Chinese).

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained herein which are not historical are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to: general economic conditions and financial markets, fluctuations in the market price of Silver Dragon Resources’ stock, changes in market prices of silver and other metals, technological and operational risks, and other risks set out in the Company's most recent Form 10-K available at www.sec.gov/edgar.shtml.

Contact
Silver Dragon Resources Inc.
Marc Hazout, President or Alessandro Motta, Investor Relations
(416) 223-8500 or Toll Free: 1-866-512- SDRG (7374)
Email: info@silverdragonresources.com

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Cautionary Note to U.S. Investors
The United States Securities and Exchange Commission (SEC) limits disclosure for U.S. reporting purposes to mineral deposits that a company can economically or legally extract or produce. We may use certain terms on this website such as "reserves," "resources," "geologic resources," "proven," "probable," "measured," "indicated" or "inferred," which may not be consistent with the reserve definitions established by the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K. You can review and obtain copies of the latest Form 10-K filing from the SEC's website at http://www.sec.gov/edgar.shtml.