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   Filed by e3 Filing, Computershare 1-800-973-3274 - Silvercorp Metals Inc. - Correspondence

    Suite 1378 – 200 Granville Street

    Vancouver, BC, Canada V6C 1S4

    Tel: 604-669-9397

    Fax: 604-669-9387

    Toll Free Tel: 1-888-224-1881

    Email: info@silvercorp.ca

    Website: www.silvercorp.ca

Via EDGAR and U.S. Mail

February 23, 2010

United States Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549-4628 U.S.A.

Attention: Roger Schwall, Assistant Director

Dear Mr. Schwall:

RE:

Silvercorp Metals Inc.

Form 40-F for the Fiscal Year Ended March 31, 2009

Filed June 8, 2009

File No. 1-34184

This letter is submitted on behalf of Silvercorp Metals Inc. (the “Company” or “we”) in response to the comments of the staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission (the “Staff” or “you”) dated January 26, 2010 (the “Comment Letter”) with respect to the Company’s Annual Report on Form 40-F for the year ended March 31, 2009 (the “Report”), which was filed on June 8, 2009.

For reference purposes, the text of the Comment Letter has been reproduced herein with a response below the comments. For your convenience, we have italicized each comment and have placed in boldface the heading of our response thereto.

Form 40-F for the Fiscal Year Ended March 31, 2009

1.

We note your disclosure that indicates your disclosure controls and procedures were effective as of the end of the period covered by your report. We note elsewhere in your MD&A that you have concluded your disclosure controls and procedures are ineffective. Please modify your documents as necessary to provide a consistent conclusion.

Roger Schwall, Asst. Director

United States Securities and Exchange Commission

February 23, 2010

Page 2

Response to Comment No. 1:

Although your observation is correct, we respectfully request that this matter, as a result of the factors and subsequent events noted below, would be most appropriately addressed in the Company’s Form 40-F annual report for the year ending March 31, 2010 (the “2010 40-F Annual Report”). Please consider:

First, the inconsistency arises from a statement contained in the Company’s Form 40-F “wrap” for the Report, rather than the MD&A for the year ended March 31, 2009 (the “2009 Annual MD&A”), which was originally filed in Canada on SEDAR and was incorporated in the Report by reference. The Report is the Company’s first annual report filed with the Commission and the inconsistency was inadvertent.

Second, the Company’s 2009 Annual MD&A as well as its interim MD&A for the subsequent three month periods ended June 30, 3009 and September 30, 2009 (together with the 2009 Annual MD&A, the “Canadian Documents”), which were originally filed in Canada on SEDAR, and have been furnished to the Commission under cover of Form 6-K, have all consistently disclosed that the Company’s disclosure controls and procedures (“DC&P”) were ineffective through the second quarter of the Company’s 2010 financial year. In other words, the more recent information available to investors is consistent with the Company’s evaluation of its DC&P as stated in its 2009 Annual MD&A.

Third, the detailed explanation of the factors that management identified in reaching effectiveness evaluation as stated in the Canadian Documents relate to the “possibility of inaccurate financial reporting”1 or “risk of inaccurate, unauthorized or incomplete data,”2 which are more closely matters of internal control over financial reporting (“ICFR”) rather than DC&P. This is also evidenced by the Company’s reference to its use of the integrated framework of the Committee of Sponsoring Organizations of the Treadway Commission, the report of which concerns proper development of ICFR. Aware that (i) some components of ICFR may concern DC&P and (ii) the distinction between ICFR and DC&P is not a bright line,3 the Company out of caution elected to conclude the DC&P is not effective. Nonetheless, we believe that investors are able to infer from the detailed explanation in the MD&A that the ineffectiveness focuses on ICFR rather than DC&P.

Fourth, although we note, and intend to comply with, your Comment No. 6 and 7 below, we believe that our DC&P is effective with respect to disclosure contained in Item 5, entitled “Mineral Properties” (nearly all of which is derived from technical reports identified therein), of the Company’s Annual Information Form for the year ended March 31, 2009 (the “2009 AIF”) that is contained within the Report.

__________________

1  Note 15(a) of MD&A for three months ended September 30, 2009, furnished under cover of Form 6-K on February 16, 2010.

2  Id.

3  “Uncertainties exist in the relationship between disclosure controls and procedures, on the one hand, and internal control over financial reporting on the other. The SEC has provided little guidance in this area.” J. Bostleman et al., Public Company Handbook (Practicing Law Institute. 2009) Vol. 2, Sec. SUMM 16.1.4.

Roger Schwall, Asst. Director

United States Securities and Exchange Commission

February 23, 2010

Page 3

Fifth, the Company’s most recent MD&A, i.e., for the three months ended December 31, 2009, and furnished to the Commission under cover of Form 6-K on February 16, 2010, states that the Company’s DC&P and ICFR are effective as of December 31, 2009. The second paragraph to note 15(a) to the interim financial statements contained in this MD&A details how the Company remediated its DC&P and ICFR. As of the date of this response, we have no reason to believe that our chief executive officer and chief financial officer will not reach the same conclusion in their effectiveness evaluation for the year ending March 31, 2010 that the Company’s DC&P and ICFR are effective and, accordingly, would so report in the 2010 40-F Annual Report.

Finally, we believe that filing an amendment to the Report for the year ended March 31, 2009, so as to remedy an inconsistency not found in the Canadian Documents, which amendment would be filed only a short period before we are required to file the 2010 40-F Annual Report, could be more confusing than beneficial to investors.

Financial Statements

Note 2 - Summary of Significant Accounting Policies

(vi) Mineral Rights and Properties, page 4

2.

We note your accounting policy which indicates under Canadian GAAP, you amortize your capitalized costs over the mine’s estimated life using the units of production method calculated on the basis of measured and indicated resources. Please tell us why you believe measured and indicated resources are sufficiently reliable, as a basis for useful life determinations under Canadian GAAP.

Response to Comment No. 2:

We amortized the capitalized costs over the mine’s estimated life using the units of production method (“depletion method”), calculated on the basis of measured and indicated resources in our financial statements for the fiscal years ended March 31, 2009, 2008 and 2007.

Paragraph 28 of Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3061, Property, Plant and Equipment, requires that amortization be recognized in a rational and systematic manner appropriate to the nature of the property. As mineral properties are mined to obtain underground minerals, the depletion method is the most rational amortization method, and is widely used in the mining industry. Accordingly, we choose depletion method on the units of production basis.

Roger Schwall, Asst. Director

United States Securities and Exchange Commission

February 23, 2010

Page 4

Prior to February 2010, we had not converted any of our resources to proven and probable reserves as defined by the Canadian National Instrument 43-101 Standards of Disclosure of Mineral Projects (“NI 43-101”), the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) – CIM Definition Standards (“CIM Definitions”) on Mineral Resources and Mineral Reserves, or Industry Guide 7 of the U.S. Securities and Exchange Commission.

We operate all four of our mines, i.e. the Ying, HPG, TLP and LM mines, in China. Our permitting and commissioning process are undertaken in accordance with the Chinese mining law and regulations. The process is rigorous. The key reports and their filing or approval required by regulators for the issuance of the mining permit are:

•

The Resource Utilization Plan Report (the “RUP”) is required to be reviewed by an independent engineering firm certified by the Ministry of Land and Resource. In addition, the Health and Safety Section of the RUP is required to be reviewed by the Provincial Safety Production Bureau. Then the RUP together with positive review conclusions has to be filed and accepted by the Provincial Department of Land and Resource.

•

The Environmental Assessment Report (the “EA”), which has to be approved by the Provincial Environment Protection Bureau. The Environmental Assessment Guideline Report which forms the base for the EA is required to be written by a qualified environmental engineering company.

•

The Geological Hazards Assessment Report, which is prepared by a qualified geo-engineering firm.

•

Once all these documents are completed, filed and approved, the mining permit application will be filed with the Ministry of Land and Resources in Beijing for final approval.

We obtained the mining permit for the Ying mine in March 2006, and acquired mining permits for TLP, LM and HPG mines in 2007 to 2008. Mining operations commenced since then. Because we were able to finance the mine development without bank financing, we were not required to commission a “bankable” feasibility study and, accordingly, did not convert resources into proven and probable reserves at the time the Chinese permits were granted or acquired.

In the absence of proven and probable reserves, we undertook an analysis of the impact of using measured and indicated resources as a depletion basis.

Roger Schwall, Asst. Director

United States Securities and Exchange Commission

February 23, 2010

Page 5

We noted from CIM Definitions that “Proven and Probable Reserves” constitute the economically mineable part of “Measured and Indicated Resources.” Based on guidance in “Figure 1, Relationship between Mineral Resources and Mineral Reserves” in the CIM Definition, we noted that in order to convert resources into reserves, we need to consider mining, metallurgical, economic, marketing, legal, environment, social and government factors. Accordingly, we analyzed each factor as follows, in order to arrive at an estimated “reserve equivalent”.

All of our four mines are in the Ying Mining District, with similar mining, metallurgical and economic nature as the Ying mine. Given that the Ying mine contributed 90% of total silver production in the past three years and the TLP, LM and HPG mines are still in the ramping up stage, we used historical operating results of the Ying mine as the basis for our analysis.

•

Mining factor: Mining methods employed at the Ying mine are the shrinkage stoping method and resuing stoping method. Based on our NI 43-101 Technical Report dated May 26, 2006, at the time of production commencement, the theoretical mining recovery rate is over 95%. Historically, average mining recovery rates in our mining operations during the fiscal years 2009, 2008 and 2007 were all above 90%. As such, we concluded that about 90% measured and indicated resource ore could be mined out, before considering any economic factors.

•

Metallurgical factor: The historical milling recovery rate, during the fiscal years 2009, 2008 and 2007 was 95% for lead, 90% for silver and 73% for zinc. That means 100% mineable resource ore can be milled, as long as they can be mined out. Milling recovery rate is also useful when “economic factor” is considered as below.

•

Economic factor:

Prior to the commencement of production, economic factors are considered in the NI 43-101 Technical Report for the Ying Mine, dated May 26, 2006. In that report, Table 36, “Cash flow Analysis for Ying Project” shows the economic merit of the Ying mine.

In addition, at the Ying mine, cut-off grade for measured and indicated resources was 200 g/t equivalent-silver, based on the NI 43-101-compliant technical report entitled “Update on the Ying Silver-Lead-Zinc and HPG Gold-Silver-Lead Projects,” dated on August 16, 2007 (the “2007 NI 43-101 Report” ). Historical net realizable silver prices were $10.17, $11.28 and $9.30, for the fiscal years 2009, 2008 and 2007, respectively. Using the above data, one tonne of ore at 200g/t cut-off grade would generate revenue about US$60 (Revenue per tonne = grade*NSR*milling recovery rate = 200/31.1035*10.25*90% = $60), which covers the historical cash costs of $58 per tonne. It is also two times greater than the variable costs of $20 per tonne, which mainly consists of mining contractor costs. That means all mineable resources are economically viable.

Roger Schwall, Asst. Director

United States Securities and Exchange Commission

February 23, 2010

Page 6

•

Marketing, Legal, Environment, Social and Government factors: We completed the Environment Impact Studies in January 2006 and obtained a mining permit in March 2006. Since then, we have had metals production as follows:

     Year ended Mar 31, 07
     Year ended Mar 31, 08
     Year ended Mar 31, 09
     9 mo ended Dec 31, 09

     Silver (million ounces)
     1.9
     4.0
     4.2
     3.5

     Lead (million pounds)
     26.3
     49.6
     53.1
     47.5

     Zinc (million pounds)
     7.1
     15.9
     13.0
     12.0

All products are sold to smelters within truck-driving distances, at FOB term. Since we acquired the Ying Project in 2004, we have maintained good relationships with local community and government agencies. As a result, we have not encountered adverse issues related to marketing, legal, environment, socials and government, etc.

Based on above analysis, we noted that “mining recovery” determines the amount of minerals that could be mined from underground, while all other factors, such as “cutoff” grade, determine whether mining is feasible and economically viable.

Given that we have 90% plus mining recovery and our resource cut-off is economically viable, we concluded that 90% of measured and indicated resources are “reserve equivalent”, i.e. a reasonable estimate as the basis in calculating depletion of mineral properties by the unit of production method.

The impact of using 100% measured and indicated resources as the basis, and a 10% difference, are quantified in the table below:

Roger Schwall, Asst. Director

United States Securities and Exchange Commission

February 23, 2010

Page 7

     in 000US$

     Fiscal 2007

     Fiscal 2008

     Fiscal 2009

     Depletion as reported (100% M&I Resources as basis)

     1,128

     3,042

     5,246

     Depletion based on 90% M&I Resources

     1,241

     3,346

     5,771

     -

     Income statements items impacts

     -

         Depletion expenses - understated

     113

     304

     525

         Impairment charges - (overstated)

     -

     -

     (443
     )

         Future income tax - understated (overstated)

     (28
     )
     (76
     )
     (21
     )

         Non-controlling interest - understated (overstated)

     (19
     )
     (60
     )
     (5
     )

         Net income - overstated (understated)

     66

     168

     56

     Balance sheet items impacts

     As at March 31, 2007

     As at March 31, 2008

     As at March 31, 2009

         Mineral Properties - overstated (understated)

     113

     417

     347

         Future income tax liabilities - understated (overstated)

     (28
     )
     (104
     )
     (87
     )

         Non-controlling interest-understated (overstated)

     (19
     )
     (79
     )
     (50
     )

         Retained earning - u