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SDRG Silver Dragon Announces Discovery of Significant Silver-Lead-Zinc Sulfide Mineralized Zones At Its Dadi Polymetallic Project in Northern China

 - Both tunnels at the Dadi tunneling project have hit underground
   Silver-Lead-Zinc mineralized zones.
 - Preliminary assay results show that the highest grades of
   mineralized bodies are: 1,704 g/t Ag, 22.15% Pb and 2.4% Zn in
   Tunnel PD02 (sample DH661); 744 g/t Ag, 16.16% Pb and 4% Zn in
   tunnel PD01 (sample DH767).
 - Underground mineralized zones discovered are composed of both
   primary (sulfide) and oxidized Silver-Lead-Zinc mineralized bodies,
   in which massive galena veins contain high silver content.
 - By the end of December 2008, the tunneling project revealed two
   underground mineralized zones that were 52 meters and 31 meters
   long, respectively, and are not closed. Longer extensions of the
   mineralized zones are predicted, and will be announced when further
   exploration results are obtained.

The work done in the 2008 exploration season was based on the surface findings of the previous year, when the East and West mineralization areas, each with significant surface mineralization, were found through a trenching project. A tunnel about 50 meters below the surface was completed in both the East and West mineralization areas.

At the end of December 2008, Tunnel PD02 in the east mineralization area was 160 meters in total length, comprised of both ore drifts and transverse drifts (see Figure1 and Table 1). The main transverse drift revealed 6.8 meters of mineralization averaging 441.62g/t Ag, 5.69% Pb, and 1.20% Zn in the 64 meter to 70.8 meter interval. All the samples were collected by the channeling method ((10cm)(3cm)(sample length)) and analyzed by ordinary chemical methods at the Yanjiao Central Laboratory of the North China Nonferrous Geological Survey Bureau, located in Sanhe City, 35 kilometers east of Beijing.

The highest grade among the samples reached (1.0 meter length) was 1,704 g/ t Ag, 22.15% Pb, and 2.40% Zn. This mineralized zone trends northwest and dips northeast at dip angles of 72 degrees-75 degrees. The length of the mineralized zone was 52 meters and not closed, while its width has not yet been defined. Significant mineralization is in the form of primary (sulfide) massive galena veins with oxidized multi-metal mineralization bodies in between (see Figures 2 and 3).

 Figure 2 Tunnel PD02 in East mineralization Area of Dadi
   (A) Starting position of tunnel and surface trench;
   (B) mixed type (primary and oxidized) Silver-Lead-Zinc mineralized
       body with massive galena veins in the tunnel.
 A Full Size Image can be downloaded at
 http://www.silverdragonresources.com/Upload/NR2009JANA02.jpg.

 Figure 3  Close-up View of Silver-Lead-Zinc mineralization in tunnel
 PD02
   (A) Galena veins with oxidized ore in the middle;
   (B) Massive galena vein occurs in oxidized mineralized body;
   (C) & (D) oxidized mineralizing body with some primary galena veins
       (light pale in color).
 A Full Size Image can be downloaded at
 http://www.silverdragonresources.com/Upload/NR2009JANA03.jpg

The aim of tunnel PD01 was to reveal underground extensions of surface mineralized zones in the West mineralization area. At 61 meters into the tunnel, however, a new south-north striking mineralized zone with 1.0 - 1.5 meter width was discovered (see Figure 4 and Table 2). Assay results show that the highest grade of a sample (0.4 meter sample length) reached 744 g/t Ag, 16.16% Pb, and 4% Zn. The silver content of some samples reached several hundred grams per tonne, plus high lead and zinc values.

At present, both mineralization zones discovered by tunnel PD01 and tunnel PD02 are fully mineralized zones, and the silver contents of over three quarters of the samples collected within the mineralization zones are higher than the industrial cutoff grade (40 g/t per meter). The discovery of the underground primary Ag-Pb-Zn mineralization zones are a significant clue for further exploration aimed at seeking more potential resources at Dadi.

"We are very excited about the good results from the tunneling program at our Dadi project and expect more achievements, to be released as further assay results become available," stated Dr. Tiebing Liu, P. Geo., Silver Dragon's geological advisor. "To facilitate the 2009 exploration program, a paved road to Dadi was built to enable the transportation of drilling rigs. We intend to launch a comprehensive exploration project, including tunneling, drilling, and trenching, so as to further control the mineralized zones, especially their dipping extensions, which have been well indicated by geophysical anomalies."

Dr. Tiebing Liu, P. Geo., a "qualified person" within the meaning of NI 43-101, reviewed and participated in the preparation of the technical information disclosed in this news release.