The largest silver producer in China says it is being accused of accounting fraud and other types of deception by an anonymous party who admits to placing financial bets that the Vancouver-based company's shares will fall.
Silvercorp Metals Inc., said Friday there has been a dramatic increase in the short position of its shares over the past two months to 23 million shares, or 13 percent of the approximately 175 million shares outstanding.
The NYSE-listed company, which says the Aug. 29 letter was sent to the Ontario Securities Commission, among other parties, accuses it of reporting a profit last year to the SEC but a loss to Chinese financial authorities. The anonymous letter further accuses Silvercorp of overstating the amount of cash on hand and the quality of its Chinese silver reserves.
Shares of Silvercorp, which denies the accusations, have dropped 46 percent in the last six months.
The company was formed as Spokane Resources Ltd. in a merger of Julia Resources Corp. and MacNeill International Industries Inc., under the British Columbia Company Act, on Oct. 31, 1991. It began trading on the NYSE in November 2009.
This type of manipulative scheme is baseless and depresses our share price and harms our shareholders, Dr. Rui Feng, Silvercorp's CEO, said in a statement.
While we are fighting these manipulation schemes, we will continue with our ongoing share buyback program, increase our investor relations efforts, and continue to focus on growth through exploration, acquisitions, and mine development. We are pleased with our current operations and look forward to reporting another profitable quarter.
On Friday the stock dropped 10.46 percent to close at $7.53. In the last 52 weeks the shares have ranged from $7.04 to $8.54.