VANCOUVER, BRITISH COLUMBIA — December 21, 2012: New Pacific Metals Corp. (“New Pacific” or the “Company”) is pleased to announce it has signed a binding letter of agreement (the “Agreement”) with Silvercorp Metals Inc. (“Silvercorp”) to acquire majority interest in its wholly owned subsidiary, Fortress Mining Inc. (“FMI”).  Pursuant to the terms of the Agreement, the Company will pay US$3.5 million to acquire an 80% interest of FMI, with an option to acquire the remaining 20% within two years for US$5 million after the Company has spent US$15.9 million on the project. Since the Transaction is a related party transaction it is subject to approval from the Toronto Stock Exchange.

In 2007 FMI and the Qinghai Geological Survey Institute (“QGSI”) established a Sino-Foreign Co-Operative Company; Qinghai Found Mining (“QFM”), with a term of 30 years. FMI owns an 82% interest and QGSI owns an 18% carried interest in QFM.  Currently, QFM’s assets consist of approximately US$2.0 million in net cash and a 67% interest in the RZY exploration project (the “Project”).

In April 2011, QFM entered into an exploration agreement with its shareholder, QGSI to jointly explore its RZY project, an early stage exploration project located in Qinghai Province, China (collectively, the “Exploration Agreement”).  The major terms of the agreement are:

• The RZY project exploration permit is held by QGSI. QFM has a 67% interest in the RZY project by funding exploration and drilling in 2012.

• The exploration permit will be transferred to QFM when one of two events occur (1) QFM completes funding of RMB30 million (US$4.8 million) on RZY project exploration or capital expenditures; or (2) the RZY project matures to a development stage project. Once transferred; QFM will have a 100% interest in the RZY project, giving FMI an 82% interest in the project.

• QFM, funded 100% by FMI; is then committed to invest an additional RMB170 million (US$27.2 million) on RZY project exploration and capital expenditures to have a total investment of RMB200 million (US$32.0 million) in exploration and capital expenditures on the RZY project.

• If QFM does not fund the required exploration and capital expenditures, the Exploration Agreement will be terminated while QFM maintains its interest in the Project.

To date, pursuant to the Exploration Agreement, FMI has invested US$3.5 million in QFM and QFM has spent US$1.5 million on exploration and development expenditures in the RZY Project. Â

RZY Project Location, Background, and Geological Exploration

The RZY Project is an early stage silver-lead-zinc exploration project, situated on a high plateau with an average elevation of 5,000 metres above sea level. The Project is located approximately 237 kilometres via paved and gravel roads from the capital city of Yushu Tibetan Autonomous Prefecture, or 820 kilometres via paved highway from Qinghai Province’s capital city of Xining.  Regular commercial flights are available from Xining to Yushu.

Known mineralization is silver-lead-zinc veins controlled by altered structure zones developed in the lower Permian marine clastic sediments. Two silver-lead-zinc mineralized zones, MI-1 and MI-2 with a strike extent of 6.5 kilometres and width of 25 to 100 metres have been identified by historical surface work conducted by QGSI including trenching, pitting, geology mapping and geophysics surveying. The geochemical profile indicated that the silver-lead-zinc mineralization is likely in situ, not floats of dispersion from sources in the surrounding mountainous area. The soil geochemical anomaly also indicated there could be another mineralized zone to the north in a flat area about one kilometre from the mountains.Â

In 2006, Silvercorp retained Golder Associates Ltd. (“Golder”) to complete a National Instrument 43-101 (“NI 43-101”) report on the RZY Project and Golder conducted a site visit between October 15 and 25, 2006. Â Samples taken by Golder from trenches and shallow pits are listed in Table 1 below. Â The results indicate that silver-lead-zinc mineralization exists at RZY.

Table 1 Assay Results of Check Samples by Golder

Exploration 2011-2012

In 2011 Silvercorp, through QFM and QGSI, conducted surface geology mapping and an induced polarization (“IP”) geophysical survey program. The IP survey commenced along the western portion of the 6.5 kilometre long mineralized zone and was completed in 2012. The survey results indicate the existence of an area of high polarization to the north of the alteration break zone, and a separate minor zone of high polarization to the south. These high polarization areas may be related to mineralized alteration zones at depth.

Trenching

In 2012, seven trenches were completed by QFM. Â Lead-zinc-silver mineralization was identified in all trenches. The mineralization is characterized by lead-zinc sulphides and pyrite as well as oxides such as litharge and limonite. The galena is blocky or massive and is associated with quartz-carbonate veins. The width of lead-zinc mineralization exposed in trenches ranges from a few metres to more than 10 metres with individual galena-quartz veins of a few centimeters to half a meter wide. Assay results from the trenches completed in 2012 confirmed the presence of high grade silver-lead-zinc mineralization as indicated by historical results (see Table 2 below). The assay results of the new trenches are shown together with the historical results in Table 2. Â High grade silver is mostly associated with high grade lead and zinc which is the case of blocky or massive lead-zinc sulphides with quartz veins, but some high grade silver intervals contain relatively low values of lead and zinc, which may mean there are multiple distinct variations of mineralization.

Table 2 Assay Intervals of Trenches and Pits

Drilling

To test the depth potential of the mineralization exposed by surface workings, over 890 metres in five drill holes were drilled in 2012. Â Multiple altered structure zones with narrow galena-quartz veins were hit in holes, but no massive or blocky lead-zinc sulphide quartz veins, as observed in the trenches on surface, were intercepted. Â Although assay results of drill cores indicated the mineralization occurs in the major east-west structural zones in the Permian clastic sediments and is continuing at depth (see Table 3 below), the width and grades of drill intercepts are inferior to the results of the surface trenches and pits. Drill hole ZK2401 did not hit any significant mineralization as exposed by the surface trenches. However, given the strike extent of the mineralization, and the high-grade nature of the silver-lead-zinc mineralization indicated by samples from the trenches and pits, New Pacific believes there is enough evidence to support the transaction and justify continued drilling at the Project in 2013.

Table 3 RZY Drill Intercepts 2012

All intervals are reported as downhole lengths and are not corrected to true widths for the mineralized intervals as drill holes typically cut mineralization at variable angles and geometries of mineralized zones remain speculative until further drilling is completed.

Alex Zhang, P.Geo., is the Qualified Person on the project as defined under National Instrument 43-101. He has reviewed and approved the contents of this news release.

Sample Preparation and Assay Results

QFM employed standard QA/QC procedures to monitor and control assay quality by regular insertion of standard reference materials, blank samples and duplicate samples prior to shipment for preparation and analysis. Drill cores are halved with diamond saw on site. Half core and trench channel samples are shipped from site by security courier to the preparation facilities of SGS, Xi’an, China for preparation. Sample preparation includes the typical process of drying, crushing, splitting and pulverizing. Pulp samples then are delivered by security courier to the analytical laboratory of SGS, Tianjin, China for analysis. Analytical method is 4-acid digestion with ICP-AES finish with the over limits going to AAS finish. Routine QA/QC procedures are also carried out at the lab by itself to monitor the quality of sample preparation and analysis.Â

The trenching and drilling results set out in this news release, including the assays that were analyzed by SGS labs in 2012, were completed for Silvercorp Metals Inc. and QGSI, and as such, pursuant to NI 43-101 are historical. The Company has not verified the historical assay results and they should not be relied upon. The only NI 43-101 technical report completed to date was the Golder technical report in October 2006. The Company intends to complete updated technical reports as exploration continues.

About New Pacific

New Pacific is a Canadian gold and silver exploration and development company which owns the Tagish Lake gold project in Yukon, Canada.

For further information, contact:

New Pacific Metals Corp.,
Investor Relations
Phone: (604) 633-1368
Fax: (604) 669-9387
info@newpacificmetals.com
www.newpacificmetals.com

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

Certain of the statements and information in this press release constitute “forward-looking information” within the meaning of applicable Canadian provincial securities laws. Any statements or information that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects”, “is expected”, “anticipates”, “believes”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategies”, “targets”, “goals”, “forecasts”, “objectives”, “budgets”, “schedules”, “potential” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements or information. Forward-looking statements or information relate to, among other things: the price of silver and other metals; the accuracy of mineral resource and mineral reserve estimates at the Company’s material properties; the sufficiency of the Company’s capital to finance the Company’s operations; estimates of the Company’s revenues and capital expenditures; timing of receipt of permits and regulatory approvals; availability of funds from production to finance the Company’s operations; and access to and availability of funding for future construction, use of proceeds from any financing and development of the Company’s properties.

Forward-looking statements or information are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking statements or information, including, without limitation, risks relating to: fluctuating commodity prices; calculation of resources, reserves and mineralization and precious and base metal recovery; interpretations and assumptions of mineral resource and mineral reserve estimates; exploration and development programs; feasibility and engineering reports; permits and licenses; title to properties; First Nations title claims and rights; property interests; joint venture partners; acquisition of commercially mineable mineral rights; financing; recent market events and conditions; economic factors affecting the Company; timing, estimated amount, capital and operating expenditures and economic returns of future production; integration of future acquisitions into the Company’s existing operations; competition; operations and political conditions; regulatory environment in Canada; environmental risks; insurance; risks and hazards of mining operations; key personnel; conflicts of interest; dependence on management.

This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements or information. Forward-looking statements or information are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements or information due to a variety of risks, uncertainties and other factors, including, without limitation, those referred to in the Company’s Annual Information Form for the year ended June 30, 2012 under the heading “Risk Factors”. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Accordingly, readers should not place undue reliance on forward-looking statements or information.

The Company’s forward-looking statements and information are based on the assumptions, beliefs, expectations and opinions of management as of the date of this press release, and other than as required by applicable securities laws, the Company does not assume any obligation to update forward-looking statements and information if circumstances or management’s assumptions, beliefs, expectations or opinions should change, or changes in any other events affecting such statements or information. For the reasons set forth above, investors should not place undue reliance on forward-looking statements and information.