Silver Dragon Signs Toll-Mill Agreement

 

TORONTO - Silver Dragon Resources Inc. reported that it has signed toll-milling agreements to process up to 12,000 tonnes of ore over the next 12 months from its wholly owned Cerros las Minitas property in Durango, Mexico. The toll-milling agreements represent the next step in the overall process of transitioning Cerros las Minitas into production.

Based on agreements signed on June 3, 2009, BESMER, S.A. DE C.V. has been appointed agent to perform the following responsibilities:

* Hauling 500-1,000 tonnes of ore monthly, commencing in June 2009

 * Metallurgical ore testing for silver and lead quantities

 * Flotation processing and packaging of ore into concentrates

 * Loading and delivery of concentrates to market for sale

 * Sale of processed concentrates on the market

 * Optional processing of byproducts (Copper, Zinc, Gold) for

   additional credits

The initial term of the contract is for twelve (12) months, with an option to extend upon agreement by both parties. Both parties will share in the revenues of bringing the ore to market, with SILVER DRAGON MINING DE MEXICO, S.A. DE C.V. receiving 55% of the profits.

In other news, the Company has completed a revised resource report on the Cerros las Minitas property, but has not released it pending negotiations for an additional mining concession on which the Company is seeking exploitative rights.

"We are very excited about the toll-milling deal with BESMER, as it enables the Company to graduate to the ranks of producing miners," commented Marc Hazout, President and CEO of Silver Dragon Resources Inc. "Moreover, this agreement has been executed in parallel to our simultaneous plan of bringing our own mill into production in the 4th quarter of this year, which should ultimately yield significantly improved profit margins.

The company’s address is 5160 Yonge Street, Suite 803, Toronto, ON M2N 6L9, 416-223-8500, fax: 416-223-8507, email: [email protected].