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Silver Dragon Report of Development and Exploration Program at Erbahuo Silver Mine, Northern China

Posted on: Tuesday, 26 September 2006, 09:00 CDT

Silver Dragon Resources, Inc. (OTCBB: SDRG) today released a progress report of the comprehensive work program underway at the Erbahuo Silver Mine at the Sino-Top projects in the Erbahuo Silver District in Northern China. The technical team of Sanhe Sino-Top Resources and Technologies, Co., Ltd. ("Sino-Top") prepared a report on the current status of the Erbahuo Silver Mine project, highlights of which are as follows:

Well-defined minable silver ore is shown to currently exceed 350,000 tonnes of ore, containing over 2,000,000 ounces of silver. The reserve calculations meet the Chinese 122b level of confidence (minable ore) and are subject to third party validation. It is intended that NI 43-101 Resource Reports for all nine properties will be commenced this fall beginning with the Erbahuo Silver Mine property.

Sino-Top has completed the cleaning and reconstruction of the existing underground mine workings. The new safety permit, which is required for production, has been obtained from the ministry after examination and approval by the local authorities. The project is now poised to begin commercial underground mining activities on the No. I ore body.

Exploration continues on the No. II ore body. A four-hole (800m) drilling project combined with a 200m long tunnel is currently under way. The first two drill holes, ZK8-1 and ZK1-1, each drilled to a depth of 200 meters at an angle of -85 degrees, have been completed. The other two drill holes, ZK6-1 (200m) and ZK2-1 (200m) are being completed with the results of core sample analyses expected in the next ten to fifteen days. All samples have been sent to the Laboratory of Geological Exploration Institute of Chifeng City, Inner Mongolia for analysis. The results of the chemical analysis on the first batch of drilling core samples are as follows:

 Drill Hole      From (m)   To (m)   Length (m) Ag (g/t)   Pb (%)    Zn (%)                 --------- --------- --------- --------- --------- --------- ZK8-1               79.80     81.70      1.90      46.2      ----      ----                 --------- --------- --------- --------- --------- --------- ZK8-1               88.50     90.50      2.00      14.2      ----      ----                 --------- --------- --------- --------- --------- --------- ZK8-1               95.50     97.00      1.50      47.2      ----      ----                 --------- --------- --------- --------- --------- --------- ZK1-1               63.00     64.20      1.20      58.8      0.52      0.15                 --------- --------- --------- --------- --------- --------- ZK1-1               64.20     65.50      1.30     104.0      0.68      0.16                 --------- --------- --------- --------- --------- --------- ZK1-1               67.80     68.75      0.95     116.0      0.46      0.16                 --------- --------- --------- --------- --------- --------- 

Small-scale silver production (acid sodium chloride leaching method) preparatory work has been completed. Silver ore has been put into the leaching pools and the leaching process will commence soon. The first batch of prepared ore is 600t with silver grades of 140 - 260 grams per tonne (4.5 oz - 8.4 oz). It is expected that by the end of October, 25 kg (804 oz) of silver metal will be produced. This small-scaled testing production aims to obtain experience and accumulate relevant data for large-scaled production scheduled to commence in the spring of 2007.

"A small-scaled production project was conducted a few years ago and the results were successful. We continue to improve the technique of the leaching process and prepare to launch large-scale production in 2007. We also plan to conduct new metallurgical testing for building a new dressing mill and have been approved for a 500 ton per day ore processing mill," stated Mr. Yang, Sino-Top Chief Geologist.

Pursuant to the terms of the Asset Purchase Agreement dated March 21, 2006 by and between Silver Dragon and Sino-Top, Silver Dragon advanced a further payment of US$139,400 to Sino-Top. Silver Dragon has entered into an agreement to acquire a 60% interest in Sino-Top, a Chinese company which holds the exploration and mining rights to nine properties including a mine located in the Erbahuo Silver District in Inner Mongolia, China. The Agreement also gives Silver Dragon the right to increase its equity interest in Sino-Top to 70%. In addition, Silver Dragon and Sino-Top are party to strategic agreements with various parties including the North China Geological Exploration Bureau (NCGEB). The final stage of the transaction will be completed upon receipt of final approval by the Chinese Ministry of Commerce. Currently, the requisite local commerce departments in China have already approved the transaction, and all remaining documentation has been submitted to the Ministry of Commerce for final approval. In the interim, Silver Dragon has committed to funding Sino-Top in order to facilitate the continuation of the comprehensive work program at the Erbahuo Silver Project.

About Silver Dragon Resources, Inc.

Silver Dragon Resources, Inc. is a mining and metal 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 the Cerro las Minitas and the Erbahuo projects in Mexico and China, respectively. 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, certain delays beyond the company's control with respect to market acceptance of new technologies or products, delays in testing and evaluation of products, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.

 Contact: Silver Dragon Resources, Inc. Marc Hazout (647) 286-8587 info@silverdragonresources.com

SOURCE: Silver Dragon Resources, Inc.

Source: MARKET WIRE

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