Resource World Magazine

Silvercorp is a low-cost silver-producing Canadian mining company with multiple mines in China which has paid a cash dividend since 2008. The Company's vision is to deliver shareholder value by focusing on the acquisition of small-scale projects in China with resource potential and selffund the growth of those assets. For more information, please visit our website at www.silvercorp.ca of its energy requirements. Chinese coal uptake can be expected to rebound on Chinese stimulus and a revival in the global economy. Coal has also faced pressure in the US, reflecting the economic dip and the slow slide of coal as an energy-providing resource. In 2010, 45% of US energy came from thermal coal; by 2035, the figure will stand at 38%, according to the US Environmental Information Administration. Therefore, coal will remain an essential component of the US's energy infrastructure and will be supported by the development of carbon capture technologies. In the meantime, China's quest to secure coking coal away from Australia will became an increasingly important factor in 2013 and beyond. In this regard, Canada, which exports most of its coke output to Japan and South Korea, expects a notable increase in Chinese consumption. A rise in the number of China-based companies seeking to obtain or expand existing stakes in Canadian coking coal operations over 2013 will also be likely. POTASH AND PHOSPHATES Potash demand from India and China was limited in 2012, while growing competition has increased pressure on the export market, Potash Corp. of Saskatchewan [POT-TSX, NYSE] said in its Q3 2012 report. However, uptake from the US has been robust, driven by demand from farmers affected by the severe drought and crop failures of 2012's summer season. The phosphate market has experienced a similar pattern, the company added. Still, Potash Corp. reported US $429/t potash during Q3, down 5% from Q3 2011. At the time of writing, spot potash prices FOB Vancouver continue to hover around US $470-475/t. It seems likely that the price levels of latter H2 2012 will run into 2013. Also of note, CNOOC and Sinope, two of China's largest state-owned energy groups, have expressed an interest to invest in Canada's potash sector, the Vancouver Sun reported on November 2. Further developments in this regard may well come into play during 2013. Longer-term, global demographics will continue to support the market. As the world's population grows and diets improve, demand for fertilizers will grow. Naturally, this will spur the upstream production of phosphates and potash. Africa will certainly be worth monitoring over the coming years as the continent slowly overhauls its agricultural industry and, quite possibly, starts a new green revolution. GOLD The past year for gold has been comparatively robust, with the yellow metal gaining support from European and US stimulus measures. Gold firmly bracketed itself above the US $1,700/oz level in response to President Obama's election victory. "The outcome of the US elections was favourable for gold as President Obama's administration is more inclined towards reflationary solutions and policies," Dan Hrushewsky, the senior analyst for precious metals at Jennings Capital Inc. told Resource World. "Gold loves reflation," Hrushewsky added. "With the US and EU synchronised in implementing reflationary programs, gold can be expected to push past US $2,000/oz next year," he added. "Once gold starts moving, it becomes a momentum trade; it builds on itself." Heated talk of the US so-called fiscal cliff will undoubtedly buoy gold and prompt more investors to head into the precious metals markets and bolster gold's support base still further. As John Kaiser, the head of Kaiser Research Online, stressed at the Toronto Resource Investment Conference 2012, gold reflects structural anxiety. If the US faces a fiscal cliff, then Europe faces a maelstrom both economically and socially, and few of the structural chasms that became painfully evident in 2012 have been fixed. "There's been no answer to the EU crisis; the big questions will have to be answered soon to avoid the breakup of the single currency [the euro]," the London-based analyst said. Asked by Resource World if he was nonetheless more positive in outlook, the analyst responded with a hefty dose of gallows humour. "On the whole, 2013 looks to be more positive than 2012 – largely because 2012 was so bad that it would be hard for things to get any worse." Hrushewsky also discussed gold as a currency option or reserve, briefly touching on TSX: SVM | NYSE: SVM 12 www.resourceworld.com DECEMBER 2012/JANUARY 2013

• Cover