Toronto, September 7, 2011 (PRIME NEWSWIRE) - Silver Dragon Resources Inc. (OTCBB: SDRG) (the "Company") is pleased to announce that a preliminary feasibility study has been completed for the Company's Silver Polymetallic silver project located in Inner Mongolia, China in accordance with Canadian Securities Administrators National Instrument 43-101 Standards of Disclosure for Mineral Projects.

The economic analysis estimates that at a 40 g/t cut-off grade, the Dadi project will generate net cash flows over the seven-year project life of US $207 million, of which US $82 million will accrue to the Company. The report estimates an internal rate of return (IRR) of 175% and a net present value (NPV) of US $142 million applying an 8% discount rate. Based upon the Company's 40% interest in the project, the IRR is 153% and NPV is $55 million. These figures are based on mineral resources and not on mineral reserves. The economic analysis included was based on measured and indicated resources. Inferred resources were not included in the economic analysis.

The report estimates the operating costs for the project at US $11.50 per metric tonne of ore processed and the capital costs to bring the mine into production have been estimated at US $13 million.

The key assumptions used in the estimates include a three-year average market price of $21/oz for silver and market price of US $0.96/lb for zinc and US$1.00/lb for lead. Key assumptions also include 20% dilution, 70% mining recovery and 40% cut-off grade. Metallurgical studies indicate 90% of the lead and 40% of the silver will be contained in the lead concentrate and 75% of the zinc and 40% of the silver will be contained in the zinc concentrate. The average grade of the lead concentrate is 66% lead and 2,670 g/t silver. The average grade of the zinc concentrate is 42% zinc and 31 g/t silver.

Marc Hazout, President and CEO of the Company stated: "As we move towards completing the permitting and preparing for production at Dadi, this updated study demonstrates the economic potential of the project. I am extremely pleased with the quality of the project as it is presently defined, as well as the future growth potential."

The study includes an NI 43-101 compliant resource estimation and model study to test the resource estimation. The resource estimation was calculated using a modified polygonal method incorporating cut-off grades of 1g/t silver and 40g/t silver. The following tables summarize the resource estimate.

 

The cut-off grade was determined solely on the basis of the silver grade. Metal equivalents were not used. The resource estimate supporting the economic analysis does not include inferred resources.

The full report titled "NI 43-101 Report Preliminary Feasibility Study Dadi Silver-Polymetallic Property Keshiketeng County, Inner Mongolia Peoples Republic of China," dated August 25, 2011 and prepared for the Company by Southampton Associates Inc., is available on the Company's website (http://www.silverdragonresources.com).

David G. Wahl, P.Eng.,P.Geo, ICD.D is President of Southampton Associates Inc. Mr Wahl is a Qualified Person as defined by NI 43-101 and is responsible for the aforementioned report. Mr. Wahl has reviewed and verified the data disclosed in this news release, including sampling, analytical and test data.