March 28, 2024

Silvercorp CEO writes letter to shareholders

VANCOUVER – Silvercorp Metals chairman and chief executive Rui Feng says his company has been attacked by a group of well-organized short sellers trying to profit by manipulating the company’s share price with false allegations and rumours.

“They are nefarious short sellers utilizing the Internet, fictitious names, and distributing false allegations with no, or false return addresses,” Feng wrote in an open letter to shareholders Monday.

“These individuals are taking advantage of shortcomings in the regulatory environment and orchestrating ‘short and distort’ or ‘reverse pump and dump’ schemes to their benefit.”

Silvercorp shares (TSX:SVM) were down 20 cents at $ 6.61 in trading on the Toronto Stock Exchange on Monday. The stock has a 52-week high of $ 15.60 and a low of $ 5.81.

Shares in Silvercorp have been under pressure since an anonymous letter dated Aug. 29, that was addressed to the Ontario Securities Commission, the company’s auditors and various media outlets accused the company of a potential $ 1.3-billion accounting fraud.

The company responded by posting more than 90 pages of accounting and other financial information on its website to disprove the allegations and has said it was going ahead with an earlier plan to hold an investor tour of its Ying mine in China later this month.

Silvercorp also noted an increase in the short position against the stock. Short sellers profit when the price of a stock falls.

A second anonymous letter raised questions about the company’s production at its mines in China, ore grades and sales to related parties. The company pointed to taxes and dividends paid to dispute those allegations.

None of the allegations against the company have been proven.

The company has said that the RCMP, the B.C. Securities Commission, the U.S. Securities and Exchange Commission and the FBI are all trying to identify the anonymous authors.

Local news from metronews.ca/vancouver

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