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News Release

Silver Dragon Reports additional 11.5M oz. Silver, 93.9M lbs. Lead and 132.8M lbs. Zinc at Dadi. Targets Mine Development in 2012

BEIJING, February 23, 2011 (PRIME NEWSWIRE) – Silver Dragon Resources Inc. (OTCBB: SDRG) (“the Company”) is pleased to announce that it has completed a geological report on the results from the 2010 drilling program at its award-winning Dadi Silver-Lead-Zinc Polymetallic project in Inner Mongolia, Northern China.

Highlights

  • Extensive exploration work has been carried out during the 2010 season with the major focus on mineralization zones I and II. These zones show the most significant mineralization so far.  Although mineralization zones (III, IV, and V) also show significant potential, they were not the focus of the 2010 season.
  • Additional resource estimation based on the Chinese National Non-ferrous Metal Resource Estimation Standards indicates that mineralization zones I and II contain 3,375,000t ore with 358.4 metric tonnes (11.5 million ounces) silver;  42,621 metric tonnes (93.9 million pounds) lead, and 60,240 metric tonnes (132.8 million pounds)  zinc.  These estimates are in addition to previous estimates disclosed in the Company’s NI 43-101 released in Q1 2010.
  • An associated element, cadmium, was found in the polymetallic ores. The cadmium resource could be of significant industrial and economic value.

The Dadi Ag-Pb-Zn-Cd Property is Silver Dragon’s most prominent project in China.  Located near the Dadi village of Keshiketeng County, Inner Mongolia, China, it has an area of 12.48 km2.  Exploration work has been carried out since 2005.  From 2009 to 2010, exploration work (Table 1) has yielded significant results. Since then, the Dadi Property has become an advanced exploration target and it will be developed into a producing property in 2012.

Tables and Figures Referenced in This Press Release

This press release references tables and figures which are too large to include.  Links to the tables and figures are included below in the section titled “Links to Tables and Figures”.  The reader is advised that some of the figures are very large and may take a few moments to download.

1. Exploration work in 2010
In December 2009, Southampton Associates Inc. (Consulting Engineers and Geoscientists) prepared an initial NI 43-101 report on the Dadi Polymetallic Project.  Based on the recommendations of the NI43-101 report on further exploration, a new round of exploration on the Dadi Property was completed successfully in 2010.  In total, 7,938m drilling (18 holes), 1,910.7m tunneling, and 226m3 surface trenching were completed (Table 1).  The amount of assaying samples analyzed total 1,216.  In addition, geophysical detection on main mineralization zones and sampling work for metallurgical testing was also carried out.

Table 1: Completed exploration work at Dadi

2. General geology and Ag-Pb-Zn mineralization type
The Dadi Property is located at the south end of Xingan Mountain Poly-metallic Metallogenic Belt and within a Jurassic volcanic faulted basin.  The exposed rocks in the property are mainly Upper Jurassic volcanic series, consisting of rhyolitic and dacitic lava, welded tuff, tuff, and sandy conglomerate.  Polymetallic mineralization zones are mainly controlled by the northwest trending fault system. Mineralization is volcanic hydrothermal fluid fracture filling type.  The multiple mineralized bodies with vein and veinlet forms occur within the mineralization zones.

3. Ag-Pb-Zn mineralization zones and mineralized bodies
At Dadi, five mineralization zones are identified and controlled by surface trenches, drill holes, and underground tunneling.  From north to south of the Property, they are mineralization zone II, mineralization zone I, mineralization zone III, and mineralization zone IV (Fig. 1).  Mineralization zone V is a blind one (being not exposed on the surface) and is located between mineralization zone I and zone II.  Most exploration work, including surface trenching, drilling and underground tunneling, was focused on mineralization zone I and zone II.

(1) Mineralization zone I
Mineralization zone I, located in the central part of the Property, is about 1,000m long, and its width ranges from 5m to 60m.  Laterally, the distribution pattern of the mineralization zone on the surface is like an “S” shape.  The occurrence of mineralization zone I is of 310°~340° strike and dips to northwest.  The southeast end of mineralization zone I is covered by Quaternary sediments.

The country rocks consist of Upper Jurassic Baiyingaolao Formation volcanic series.  Within the mineralization zone, strong alteration is characterized by silicification, chloritization, carbonatization, limonitization, as well as epidotization, sericitization, and fluoritization.

Within mineralization zone I, a total of 5 mineralized bodies (i, i-1, i-2, i-3 and i-4) have been identified and their main features are as follows (see Table 2):

Mineralized body (i) is located in the northwest segment of the mineralization one I and is 350m long (from exploration lines 1 to 15) and 3.7m wide in average with the widest part (10m wide) at TC12 (trench no. 12).  The highest grades on the surface are Ag 2,938 g/t, Pb 15.22%, and Zn 2.1%.  The transverse drifts (CM0~CM15) at PD1 tunnel (at 1,426m elevation level) and drillings reveal that mineralized body (i) is of 310°~340° trending and dips to northeast with dip angle 70°.  The controlled mineralization depth reaches 350m below the surface.  Mineralized body (i) pinches and swells along strike and dip, and is even branched.  The weighted average grades of the whole mineralized body (i) are Ag 92.8 g/t, Pb 1.24% and Zn 1.28%. 

Table 2: Mineralized body features of mineralization zone I

Mineralized body i-1 is at south end of the trench 13-3 (TC13-3 at exploration line 13) is of 310° strike and dips northeast with 50° dip angle.  It is 90m long and 2.7m wide in average.  The average grades are Ag 49.73 g/t, Pb 0.94%, and Zn 0.7%.

Mineralized body i-2 is 10m southeast of mineralized body (i) and has 310° strike and dips to northeast with 45°~60° dip angle.  The inferred length of the mineralized body is 70m, and its average width is 2.2m.  At the depth, the width of mineralized body I-2 becomes wider (4.6m~5.2m).  The average grades are Ag 20.47 g/t, Pb 0.41%, and Zn 0.87%.

Mineralized body i-3 is 20m southwest of mineralized body (i), is of 330° strike and dips northeast with 70° dip angle.  Since only one surface trench reveals it, the inferred length of the mineralized body is 60m and the width 1m.  The average grades are Ag 10.3 g/t, P 0.26%, and Zn 0.53%.

Mineralized body i-4 is 150m from the south extension of mineralized body (i) and has 310° strike and dips to northeast with dip angle 80°.  The inferred length is 50m and its width is 0.95m.  One drill hole (ZK0804) reveals that the dip extension depth of mineralization reaches 220m below the surface.  The highest grades are Ag 382 g/t, Pb 5.17%, and Zn 1.6%; and the average grades are Ag 178.4 g/t, Pb 2.41%, and Zn 1.16%.    

All the five mineralized bodies within mineralization zone I are controlled by the main NW trending fault structure. In general, mineralized body (i) is the most significant one.  It has also been learned that, with increasing depths, the mineralization pattern gradually changes from Ag-Pb-Zn association dominance to Zn-Cu association dominance.

(2) Mineralization zone II
Mineralization zone II is located in northeast part of the Property (Fig. 1).  It is 1,000m long, has 310° strike and dips to northeast with 60°~70° dip angle.  From exploration lines 2 to 28, trenches control the mineralization zone exposed on the surface; two tunneling systems (1,426m elevation and 1,384m elevation) and 13 drill holes control the deep part of the mineralization zone.  Up to now, six mineralized bodies are identified (ii, ii-1, ii-2, ii-3, ii-4, and ii-5) within mineralization zone II, among which mineralized body (ii) is the most important one and accounts for nearly 80% of Ag-Pb-Zn resources of the whole Property.  The characteristics of each mineralized body are listed in Table 3.

Table 3: Mineralized body features of mineralization zone II

Mineralized body (ii) occurs at the northwest segment of mineralization zone II (Fig. 1).  It has 320° ~ 340° strike and dips to northeast with 70° ~75° dip angle. Its distribution is stable along strike with good continuity and the Ag-Pb-Zn grades are also quite stable, but the width changes.  On the surface, it is 350m long with maximum width 6m, consisting of oxidized ores.  At the 1,426m elevation tunnel, the controlled length is 400m, but at the 1384m elevation tunnel, the controlled length reaches 500m.  Every transverse drift within the tunnels reveals mineralized body (ii) with width varying from 0.5m to 21.4m. 

Thirteen drill holes reveal that the deepest mineralization reaches 430m along dip extension of mineralized body (ii). The widths of mineralization intervals revealed by drill holes are from 4.6m to 41.54m.  The weighted average grades are Ag 167.2 g/t, Pb 1.68%, and Zn 1.98%.  Main metal minerals consist of galena, sphalerite, Ag-tetrahedrite, and lesser amounts of native silver and chalcopyrite.  Galena and Ag-tetrahedrite are the main silver containing minerals besides native silver. 

The two kinds of major country rocks are tuffaceous sandy conglomerate and rhyolitic and dacitic welded tuff.  From table 4, it can be seen that polymetallic mineralization is to some degree selective within the type of country rocks.  For instance, at drill hole ZK0401 (from 235.5m to 238.2m interval), the massive ore within rhyolitic welded tuff is 2.7m wide with average grades Ag 2,647.8 g/t, Pb 27.3%, and 28.07%.  In contrast, the tuffaceous sandy conglomerate hosted mineralized body has lower grades.

Table 4: Drifts and drill holes reveal mineralized body ii

Mineralized body ii-1 is located at southwest of mineralized body II and has 320° strike, dips to northeast with 70° dip angle.  It is 50m long, 3.1m wide and the average grades are Ag 28.6 g/t, Pb 0.37%, and Zn 0.36%.

Mineralized body ii-2 occurs at southeast end of mineralization zone II, and is 50m long, 1.4m wide with average grades Ag 145 g/t, Pb 0.3%, and Zn 0.72%.

Mineralized body ii-3 occurs at the farthermost southeast end of mineralization zone II and is 280m long with average width 0.75m. The average grades are Ag 73.4 g/t, Pb 0.83%, and Zn 0.69.

Mineralized body ii-4 is a blind one and occurs parallel to mineralized body (ii).  It is 400m long with average width 3.53m.  The average grades are Ag 25.1 g/t, Pb 0.36%, and Zn 1.41%.

Mineralized body ii-5 is revealed by two drill holes (ZK0803 and ZK0807) at exploration line 8.  It is 50m long, 1.4m width average, and has 130m dip extension.  The average grades are Ag 62.9 g/t, Pb 1.63%, and Zn 1.81%.

Figures 2, 3, 4, 5 and 6 show geological sections of exploration lines 12, 8, 4, 0 and 3 respectively and Figure 7 is a combination of these geological sections of mineralization zone II.   It can be seen that the main mineralized body (ii) has good continuity and significant dip extension.  In Figures 3 and 4, geophysical sections at exploration lines 8 and 4 are shown and mineralized bodies coincide with the geophysical anomalies (high electrical polarizability and low resistivity), which indicate further exploration targets.

Figures 8 and 9 shows the underground exploration systems at 1,426m elevation level and 1,384m elevation level respectively.

(3) Mineralization zone III
Mineralization zone III is located at 250m southwest of mineralization zone II (Fig. 1).  The zone is about 800m long and has 325° strike.  Its continuity is poor and Quaternary sediments cover both of its ends.  Within mineralization zone III, surface trenches control mineralized body (iii), which is 250m long and 1m wide.  The average grades are Ag 8.9 g/t, Pb 0.08%, and Zn 0.66%.

(4) Mineralization zone IV
Mineralization zone IV is located in the central south part of the Property and about 260m south of mineralization zone III (Fig. 1).  It is 450m long with width from 0.8m to 7.2m.  The surface trench reveals the average grades Ag 15 g/t, Pb 0.29% and Zn 1.71%.

(5) Mineralization zone V
Mineralization zone V is a blind one and occurs between Mineralization zones 1 and II.  It is 200m long with 320° strike.  Four drill holes reveal 6 mineralized bodies (v-1, v-2, v-3, v-4, v-5, and v-6), among which mineralized body v-2 with 9.9m width is more significant (Table 5).

Table 5: Mineralized body features of mineralization zone V

4. Quality control of sampling, assaying and data verification
For drilling core, the sampling method consists of dividing the core along the middle line into two parts; one part for assaying and the other for storage.  The sample lengths are from 1 m to 1.5m and the minimum sample length is 0.4m.  Closing samples are taken from each mineralized body at the hanging wall and footwall to ensure that the mineralized body is closed by sampling.

Within underground drifts, the sampling method is channel sampling which is cut to 10cm wide and 3cm deep on the drift wall.  The sample length is from 0.4m to 1.5m.  Samples are collected to close the mineralized body at the hanging wall and footwall.

Collected samples are analyzed in the Yanjiao Central Laboratory of North China Nonferrous Geological Survey Bureau.  From 2006 to 2009, 3,435 samples were analyzed, among which 126 samples were subject to internal assay verification and 61 samples were subject to external assay verification.  In 2010, 1,000 samples were analyzed, among which 85 samples were subject to internal assay verification at the Central Laboratory and 53 samples were sent to ALS Laboratory Group, Mineral Division – ALS Chemex in Guangzhou (www.alschemex.com) for external assay verification.

The results of both the internal and external verifications show that the original assay results are of high quality and accuracy.

5. Initial resource estimation
Based on available data, the initial resource estimation of silver, lead and zinc has been carried out according to Chinese National Non-ferrous Metal Resource Estimation Standards.

Table 6 shows the industrial cutoff grades and the lowest industrial grades of silver, lead and zinc for resource estimation. 

About National Instrument (NI) 43-101 and Chinese National Non-ferrous Metal Resource Estimation Standards
Assessment is preliminary in nature that it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.   The Securities and Exchange Commission does not recognize or accept NI 43-101 or Chinese estimate reporting standards.  The reader is advised to perform the necessary due diligence and not make decisions solely based on the information in this press release.

Table 6: Industrial parameters for resource estimation    

The resource estimation is based on the following formula:

   P = V × D × C 

P-amount of metal resource; V-volume of ore; D-volumetric weight of ore; C-average grade.

From 2008 to 2010, 44 pieces of ore samples were analyzed for volumetric weight of ore with the average value being 3.53g/cm3 (3.53 t / m3).

Other parameters, calculation processes, and categories of resources of resource estimation are based on Chinese National Non-ferrous Metal Resource Estimation Standards.

The results of resource estimation as follows:

  • Mineralization zone I (332+333+334): 1,755,000t ore, containing 207 tonnes of silver, 30,636 tonnes of lead, and 24,517 tonnes of zinc;
  • Mineralization zone II (332+333+334): 5,745,000t ore, containing 719.4 tonnes of silver, 72,054 tonnes of lead, and 114,224 tonnes of zinc;
  • Other mineralization zones (334): 4,770,000t ore, containing 94.7 tonnes of silver, 14,334 tonnes of lead, and 60.607 tonnes of zinc.
  • Total resources for all five mineralization zones (332+333+334) are 12,270,000 tonnes of ore, containing 1021.4 tonnes (32.7 million oz.) of silver, 117,023 tonnes of lead and 199,348 tonnes of zinc. These numbers include previously disclosed resources from exploration prior to 2010 defined in the Company’s NI 43-101 released in Q1 2010.
  • Additional resource estimation based on the Chinese National Non-ferrous Metal Resource Estimation Standards indicates that mineralization zones I and II contain 3,375,000 tonnes ore with 358.4 tonnes (11.5 million ounces) of silver; 42,621 metric tonnes (93.9 million pounds) of lead, and 60,240 metric tonnes (132.8 million pounds) of zinc.  These estimates are based on exploration and analysis conducted after the Company’s NI 43-101 released in Q1 2010.

In addition, 10 combined ore samples were collected from mineralized body (i) and mineralized body (ii) to analyze the contents of associated useful metal elements, including Au, Ge, Ga, In, Cd, Co, and Ni.  The results of chemical analyses indicate that the average Cd (Cadmium) content reaches 0.06% in mineralized body (i) and 0.08% in mineralized body (ii) respectively (industrial grades of Cd are from 0.01% to 0.09%).  Based on this data, an initial estimation of Cd resources reaches 5,649t in mineralized body (i) and mineralized body (ii) (Table 8). This indicates a further economic potential in addition to silver, lead and zinc.

Figures 10 and 11 are longitudinal sections of mineralized body (i) and (ii) respectively.  Details of resource estimation for each mineralization zone and mineralized body are in Table 8.

Table 7: Resource estimation of Dadi Property

The results of the initial resource estimation indicates that silver, lead, and zinc resources of the Dadi property have  reached a medium-sized polymetallic deposit by Chinese standards, with significant further potential expected to be proven with by additional exploration work.

    6. Further exploration and development plan

  • Further exploration will focus on mineralization zones I and II in order to increase the amounts of mineable polymetallic resources by tunneling and underground drilling.  For other mineralization zones, surface drilling will be continued
  • Metallurgical testing will be completed shortly to provide basic industrial and economic parameters for development design.
  • The construction of the ore processing mill and the underground mining system will commence in order for Dadi to become a producing property by 2012.
  • Since the associate element Cadmium is found in polymetallic ores, further testing work will be conducted to evaluate its industrial and economic values.

Dr. Tiebing Liu, P. Geo., a "qualified person" within the meaning of NI 43-101, reviewed and participated in the preparation of the technical information disclosed in this news release.

About the Dadi Polymetallic Silver Property
Dadi is one of the six exploration properties of Sanhe Sino-Top Resources and Technologies Ltd. ("Sino-Top"), a Chinese company that holds exclusive exploration rights to these properties, located in the prolific Erbahuo Silver District in Inner Mongolia, China.  Silver Dragon Resources Inc. has a 40% ownership interest in Sino-Top. The Dadi exploration area, covering 12.48 square kilometers, is located in the Mesozoic volcanic basin in Keshiketeng County, Inner Mongolia, China. 

Geologically, the Dadi property is located in the south edge of the Daxinganling metallogenic belt and at the joint between the Daxinganling mountain chain (with north-east direction) and the Xilamulunhe structure belt which trends in an east-west direction.  These two structural belts are also two major ore-forming belts of China.  This entire tectonic setting provides a dynamic geologic environment for the development of mineralizing systems.  The major exposed rocks in the Dadi Property are Upper Jurassic Baiyingaolao Formation dacitic tuffaceous lava, dacitic tuff, rhyolitic tuff, and tuffaceous sandstone and conglomerate, among which dacitic tuffaceous lava and dacitic tuff are the main host rocks of mineralization.

An independent review of the Dadi property was completed in Q1-2010, with the results presented in a Technical Report prepared by Southampton Associates Inc. of Toronto, Canada (see press release of May 6, 2010).

The Company has retained Southampton Associates Inc. to revise its National Instrument 43-101 report on the Dadi Property, as well as to evaluate the viability of a central mill complex to process future production from the Dadi Polymetallic-silver Property and the Company’s Laopandao Property. 

About Sino-Top – China Mining 2009 Award Winner:
Sanhe Sino-Top Resources & Technologies, Ltd. (“Sino-Top'') was originally incorporated in 2003 as a Chinese company wholly-owned by Huaguan Industrial Corp. (“HIC''), a subsidiary of the state-owned North China Geological Exploration Bureau.  Sino-Top became an American-Chinese joint venture in 2005.  Silver Dragon Resources Inc. acquired Sino-Top in 2006, and currently owns 40% of Sino-Top after having sold 50% of its ownership interest to its Chinese partners.  The Chinese side partners, led by Gansu Shengda Group Ltd. (“Shengda”), at 52%, and HIC, at 8%, collectively together own 60% of Sino-Top.  Sino-Top holds exclusive exploration and development rights to six properties in northern China (Inner Mongolia), covering a total area of 139 km2.  Sino-Top won the prestigious Prospector/Explorer of the Year Award for its Dadi Silver Polymetallic Project, at the China Mining Congress & Expo 2009 held in Tianjin, China, during October 20-22, 2009.

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, such as statements regarding the exploration and development of the Laopandao and Dadi Silver Project, outcome and timing for the completion of further assays and metal amounts in partial assay results, are forward-looking statements.  Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects,” “plans,” “anticipates,” “believes,” “intends,” “estimates,” “projects,” “aims,” “potential,” “goal,” “objective,” “prospective,” and similar expressions, or that events or conditions “will,” “would,” “may,” “can,” “could” or “should” occur.

Information inferred from the interpretation of assay results and information concerning mineralization zones may also be deemed to be forward looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed.  Forward-looking statements 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, certain delays beyond the company's control with respect to future assay results, delays in testing and evaluation of assays, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. 

Links to Tables and Figures
Tables 1 through 7:
http://silverdragonresources.com/Upload/TablesFeb2011.pdf
Figure 1 – Geological map of Dadi:
http://silverdragonresources.com/Upload/FEB2011_FIG_01.JPG
Figure 2 – Geological section of exploration line 12:
http://silverdragonresources.com/Upload/FEB2011_FIG_02.JPG
Figure 3 – Geological section of exploration line 8:
http://silverdragonresources.com/Upload/FEB2011_FIG_03.JPG
Figure 4 – Geological section of exploration line 4:
http://silverdragonresources.com/Upload/FEB2011_FIG_04.JPG
Figure 5 – Geological section of exploration line 0:
http://silverdragonresources.com/Upload/FEB2011_FIG_05.JPG
Figure 6 – Geological section of exploration line 3:
http://silverdragonresources.com/Upload/FEB2011_FIG_06.JPG
Figure 7 – Comprehensive geological sections:
http://silverdragonresources.com/Upload/FEB2011_FIG_07.JPG
Figure 8 – Geological map at 1384m level tunneling system:
http://silverdragonresources.com/Upload/FEB2011_FIG_08.JPG
Figure 9 – Geological map at 1426m level tunneling system:
http://silverdragonresources.com/Upload/FEB2011_FIG_09.JPG
Figure 10 – Longitudinal section of mineralized body i:
http://silverdragonresources.com/Upload/FEB2011_FIG_10.JPG
Figure 11 – Longitudinal section of mineralized body ii:
http://silverdragonresources.com/Upload/FEB2011_FIG_11.JPG

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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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.