Bloomberg News

Silvercorp Denies Report on Sales, Says FBI Seeking Authors

September 14, 2011

(Updates with closing share price in last paragraph.)

Sept. 14 (Bloomberg) -- Silvercorp Metals Inc., the Chinese miner accused of fraud in an anonymous letter last month, rejected another report that questioned the quality of the company’s ore and volume of sales to a related party.

The report was published yesterday by Alfredlittle.com, a website that posts research on companies doing business in China. Silvercorp denied the report’s findings and posted documents today on its website that it said disprove the allegations. The shares rose 4.2 percent in New York.

Silvercorp says a group of short sellers is targeting the company by publishing “false, selective or ignorant statements and rumors.” The Vancouver-based company previously denied an Aug. 29 anonymous letter that said Silvercorp reported a profit in calendar 2010 to the U.S. Securities and Exchange Commission while posting a loss to regulators in China.

“I invite the authors of the anonymous allegations to come out of the shadows and participate with the regulators in their investigations,” Silvercorp Chairman and Chief Executive Officer Rui Feng said in a statement.

The Federal Bureau of Investigation, the SEC, the British Columbia Securities Commission and the Royal Canadian Mounted Police are trying to identify the authors of the reports, Silvercorp said.

Simon Moore, who says he’s a managing editor at Alfredlittle.com, didn’t immediately respond to an e-mail request for comment.

Silvercorp rose 26 cents to C$6.46 as of 4:10 p.m. in Toronto Stock Exchange trading. The shares, which have declined 49 percent this year, dropped 20 percent yesterday.

--Editors: Steven Frank, Charles Siler.

To contact the reporter on this story: Simon Casey at scasey4@bloomberg.net.

To contact the editors responsible for this story: Joshua Fineman at jfineman@bloomberg.net; Simon Casey at scasey4@bloomberg.net.


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